Occurrence--Part #2

IF you have spent any time in this business you realize one thing over and over again----Carriers do not like to pay “property damage” liability claims and especially construction property damage liability claims!

Among the things used to deny coverage---

        *Insured was not liable---see you in court.

        * Exclusions


        Completed Operations—Pd to the product/work;

        Impaired property

        *There was no occurrence---No physical snap, crackle, pop—we can go along with this.

        It was not an accident—Give me a break!

        *We don’t want a GL policy to become a performance bond.

        We discussed the “no accident” concept with part #1 and now we shall return. Could this argument ever be legitimate?  Sure. No insurance policy covers intentional acts so if the carrier can prove that the work was done wrong INTENTIONALLY then no damage is covered. The insured deliberately skipped important steps and/or material but charged as if all was done correctly that is intentional. But, to say that any loss arising out of “faulty workmanship” can never be an accident is ridiculous. Just because something goes wrong does not mean that was intentional and deliberate. If everybody did everything correctly they would never need insurance nor would they ever be liable. In fact, there would never be a loss. I was putting something together for a Christmas decoration this year. I was careful and followed the directions to a “T” but something went wrong and it cracked. Does this mean it was not an accident?  Of course not. I did not intentionally crack it. (The loss might have been excluded but that is for another day—we are just talking about the concept of an accident right now). Using the argument of “no occurrence” has been around for years but now it is being used EVERYWHERE and agents and brokers need to be ready to fight it out. Carriers are stretching this by saying that even if the insured did not intentionally cause the loss “he/she/it knew, or SHOULD have known, that the work was not perfect and hence all loss arising, by definition, can not be an occurrence as it is not accidental”.  WRONG. BTW—Carriers are using these arguments to deny coverage for the GC if the loss arises from the work of a sub.

    Every loss that I have heard about or read about so far has involved property damage. PD losses are the “hassle makers” of this business. However, you will notice that the word “occurrence” is not only needed for a Pd but for a bodily injury. I have asked several carriers (and have used this argument) ----- let’s say that a contractor puts in a new ceiling. It was not done correctly but he did not intentionally do it wrong. This ceiling is in an office meeting room. A month later it collapses and 35 insurance adjusters are seriously injured as they are attending a GL adjusters class. They all collect WC and they and the WC carrier proceed to sue the contractor. If the insured “knew or SHOULD have known” that the loss was not perfect does that mean that none of the bi is covered? According to the ‘logic’ that carriers are using the answer seems to be “NO COVERAGE”! I would like to see someone use that. They would be laughed out of court.

    There are a lot of articles and information on this topic. If you want to see a LONG list and you have access---go to IIABA’s Virtual University and search “No Occurrence”. You will find lots. In addition here are a couple of cases that you might find interesting—

            *Travelers v. Miller Building Corp

    *American Family v. The Pleasant Co.-- If you want to read a case that gets into all of the issues this is a good one. I was involved in this case. We won at the trail court but lost at the Appellate Court but won at the Supreme Court. If you really want to see the arguments being used today read both the appellate decision as well as the Supreme Court decision.

       Appellate Court Decision                       

                    Supreme Court Decision