The Ohio Supreme Court’s October 9, 2018 decision in Ohio Northern University v. Charles Construction Services, Inc., 2018-Ohio-4057 issued a blow to general contractors attempting to obtain insurance coverage under their commercial general liability (CGL) policies for property damage caused by their subcontractor’s faulty work. The Ohio Supreme Court held that faulty work is not “accidental” or “fortuitous,” as contemplated within the policy’s definition of an “occurrence,” and found that the general contractor had no coverage under its CGL policy.

Ohio Northern University (University) sued the general contractor, Charles Construction Services, Inc. (CCS) arising out of a contract to build a luxury hotel and conference center (Project) on the University’s campus. After completion of the Project, the University discovered extensive water damage from hidden leaks and other serious structural defects that it believed were caused by the defective work of CCS and its subcontractors. In response to the University filing suit, CCS sought coverage under its CGL policy, relying on the products/completed operations (PCO) coverage available for claims involving property damage caused by the faulty work of a subcontractor.


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Are you a construction company owner, CFO, controller, or lead estimator involved in the bidding process?

On October 13th, join construction industry leaders, Bill Burke, Jason Copley, David Kane, and Anthony Stagliano, for a hands-on seminar, providing insights into effective strategies to maximize your profitability through innovative insurance, surety, legal, and accounting perspectives.

To register, contact Olivia Kornilowicz at 215.564.1700 or opk@cohenseglias.com.


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[Note from the Editor: Due to an inadvertent editing error, omitted from our post entitled NJ Supreme Court Gets It Right! Consequential Damages Caused By A Subcontractor’s Defective Construction Work Is Insured was the fact that the property damage at issue occurred after the project was completed.  The insurance coverage at issue in the case was completed operations coverage included in the commercial general liability form.  The corrected article appears below.] 

Consultant presenting insurance concept and risk managementThe New Jersey Supreme Court’s August 4, 2016 decision in Cypress Point Condominium Association, Inc. v. Adria Towers, LLC opened the door for general contractors to obtain insurance coverage under their commercial general liability (CGL) policies for property damage caused by their subcontractor’s defective work after the project was completed.
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As members of the construction industry know, to describe the relationship between a surety and the party to whom it issues a surety bond (the principal) as confusing would be an understatement.  In fact, many believe that the surety-principal relationship is similar, if not identical, to the insurer-insured relationship. In a recent federal court opinion

For most people, there is only one thing more excruciating than a discussion about insurance coverage: a blog post about it.  So brace yourselves dear readers.

With all kidding aside, the importance for contractors and owners to understand the ins and outs of their insurance policies, and the risk transfer mechanisms that they are using,

As commercial property owners and their tenants assess the damage caused by Hurricane Sandy, they need to understand their rights and obligations under leases, mortgage loan documents, and insurance policies.

LEASE PROVISIONS

As a result of storm damage, many buildings were temporarily uninhabitable or sustained such significant damage as to be uninhabitable or untenantable for

Recent Pennsylvania court decisions have virtually eliminated any insurance coverage under commercial general liability policies for claims brought against general contractors arising from the faulty workmanship of their subcontractors.

Construction Executive.pngJonathan A. Cass, partner with Cohen Seglias Pallas Greenhall & Furman, PC, recently co-authored an article with Peter Stoll, Jr. and Mary Stoll Walter of

Jonathan A. Cass, senior counsel with Cohen Seglias contributed to this post.

Your company is sued as a result of an alleged constructive defect. You tender the claim to your insurance company and they hire and pay for a lawyer to defend your company. It is later determined that there is no insurance coverage for the construction defect claim. Can the insurance company force your company to reimburse it for all the costs that it spent in defending the action? The answer depends on the language contained in your insurance policy.

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Recently, the Pennsylvania Supreme Court determined that an insurer who assumes an insured’s defense is forbidden from seeking reimbursement of defense costs from the insured unless the policy specifically permits it to do so.

American and Foreign Insurance Company v. Jerry’s Sport Center, Inc.

In American and Foreign Insurance Company v. Jerry’s Sport Center, Inc., the Court held that even if a court ultimately determines that an insurance company had no duty to defend its insured, that insurance company generally cannot seek reimbursement of defense costs from the insured “absent an express provision in the written insurance contract.”

Jerry’s Sports Center (Jerry’s) was a sporting good store that sold firearms. It was one of eighteen firearms wholesalers and distributors sued by the National Association for the Advancement of Colored People (NAACP) and the National Spinal Cord Injury Association (NSCIA) who “sought to hold the firearms industry liable for injury, death, and other damages to association members through the negligent creation of a public nuisance by virtue of the industry’s failure to distribute firearms reasonably and safely.” The NAACP and the NSCIA alleged that the firearms dealers caused bodily injury to its members, and while it did not seek monetary damages to compensate individual members injured by the defendants’ actions, it did seek injunctive relief, along with monetary damages to “establish a fund for the education, supervision and regulation of gun dealers.”


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