Sheehan Construction Co. v. Continental Casualty Co.
935 N.E.2d 160 | Indiana Supreme Court | 2010
What This Case Means for Subcontractors
Sheehan Construction sued its insurance company after a subcontractor did faulty work on a project. The insurance company claimed the policy didn't cover bad workmanship. Indiana's Supreme Court ruled that poor workmanship CAN be covered by insurance if it was unintentional and unforeseeable, and sent the case back to trial to figure out whether the subcontractor's mistakes were intentional or accidental. This matters because it means your general liability insurance might actually cover subcontractor defects—but only if you can prove they weren't on purpose.
Key Takeaways
- •Document that subcontractor errors were unintentional. If a claim arises, you'll need evidence the work was a genuine mistake, not negligence or willful misconduct.
- •Review your CGL policy's definition of 'occurrence' and any workmanship exclusions. Some policies may still exclude faulty workmanship entirely, so don't assume you're covered.
- •Include strong indemnification clauses in subcontracts requiring subs to carry their own insurance and defend you for their defective work. This protects you even if your policy doesn't cover it.
Faulty workmanship may constitute an accident depending on the facts.
Frequently Asked Question
Will my insurance cover it if a subcontractor does bad work?
Maybe. If the subcontractor's poor workmanship was truly unintentional and unforeseeable, your CGL policy may cover it as an 'occurrence.' However, if the defect resulted from negligence or was foreseeable, coverage likely won't apply. Always check your specific policy language and consult your insurance agent about workmanship exclusions.
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