Lamar Homes, Inc. v. Mid-Continent Casualty Co.
242 S.W.3d 1 | Texas Supreme Court | 2007
What This Case Means for Subcontractors
A homebuilder's insurance company tried to deny coverage for a homebuyer's defective construction lawsuit, claiming the damage didn't qualify under the policy. The Texas Supreme Court ruled that unintended construction defects can count as an 'accident' and damage to a home can count as 'property damage' under a commercial general liability (CGL) policy. This means insurers must defend homebuilders against these claims, even when the defects are in the builder's own work.
Key Takeaways
- •Your CGL insurance should cover defective construction claims from homebuyers, even if the defects are in work you performed yourself
- •Make sure your insurance policy clearly defines 'occurrence' and 'property damage' to avoid coverage disputes when problems arise
- •Document all construction work and defect reports carefully—your insurer's duty to defend depends on what the homebuyer alleges, not just what you can prove later
Defective construction or faulty workmanship damaging only the general contractor's work is 'property damage' under the CGL policy.
Frequently Asked Question
Does my CGL insurance cover me if a homebuyer sues for defective construction work?
Yes, according to this Texas Supreme Court decision. Unintended construction defects count as an 'accident' and damage to the home counts as 'property damage' under a standard CGL policy. Your insurer must defend you against these claims, even if the defects are in work you performed. However, coverage depends on your specific policy language, so review it with your agent.
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