While construction defects used to be perceived as faults that are not covered by insurance, more and more states are ruling the opposite. Defects are now often seen as construction accidents.
To identify whether a defect can be considered an accident and thus to fall under the general liability insurance policy, you can check four criteria. These are: if the faulty work was an accident; if the faulty work lead to property damage; if the defect is not clearly excluded from the insurance policy; and if there is such an exclusion, is there an exception that keeps the coverage intact.
Still, the court decision varies from state to state. In some cases, such defects are seen as the fault of the contractor or subcontractor. In other cases, negligent or defective work is seen as an accident, as it is not intentionally done by the contractor.
Category: Commercial Bonds