Connecticut Supreme Court, in a Case of First Impression, Holds Negligent Construction Insured Under General Liability Policy

Connecticut Supreme Court, in a Case of First Impression, Holds Negligent Construction Insured Under General Liability Policy

In Capstone Building Corp. v. American Motorists Insurance Co., 67 A.3d 961 (Conn. 2013) [enhanced version available to lexis.com subscribers], a case of first impression, the Supreme Court of Connecticut considered whether allegations that a subcontractor’s unintended defective construction work damaged non-defective property.  In the balance was whether the court would join a growing number of decisions holding negligent construction is insured under general liability policies.  This is a critical issue for insurance law practitioners, as more and more state high courts are tackling this fundamental question.

The case concerned whether a general contractor and project developer for construction at the University of Connecticut could recover when U. Conn. alleged construction defects.  The insurer denied that claim.  The Supreme Court analyzed the definitions of “occurrence” and “property damage” under the policy, as well as prior decisions interpreting those terms.  The court also evaluated the insurer’s argument that providing coverage would convert its policy into a performance bond and that overalapping coverage constituted a basis for denial under the general liability policy. This commentary examines how the court decided all of these issues and the possible consequences of the court's findings in the case.

     

     

Mr. Insua  is a Partner , Mr. Kane is an Associate, and Mr. Russo is a Law Clerk in the Newark, New Jersey office of McCarter & English, LLP.  They may be reached by e-mail at ninsua@mccarter.com; dkane@mccarter.com; and marusso@mccarter.com.

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