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.
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.