Liberty Mutual Sued for Failing to Defend Manufacturer in Property Damage Cases

A new lawsuit filed in California federal court targets Liberty Mutual Fire Insurance Company for allegedly refusing to defend Spears Manufacturing in two property damage lawsuits tied to construction defects in Louisiana and Colorado. Spears, a producer of CPVC piping, asserts that Liberty Mutual failed to meet its defense and indemnity obligations under two commercial general liability policies, both of which covered the 2018 to 2020 period.

The dispute centers on two cases: one involving leaking sprinkler systems at a Louisiana State University apartment complex, and another concerning construction defects at a Denver mixed-use development. In both cases, Spears says it informed Liberty Mutual promptly but received little to no support, forcing the manufacturer to cover legal fees and settlements out-of-pocket.

For claims adjusters, the litigation spotlights critical issues in commercial policy enforcement, particularly the scope and timeliness of insurer defense responsibilities. The complaint highlights ongoing friction between policyholders and carriers over what constitutes adequate participation in litigation, especially when coverage questions delay claims resolution. This lawsuit also underscores the importance of proactive and documented communication between insureds and insurers, especially in large-scale property damage disputes.

If Spears’ claims are upheld, the case could set a precedent affecting how insurers approach complex litigation tied to construction materials and property damage, influencing coverage denial strategies and defense obligations.