Insurance Coverage for Defective Construction: Litigation, Legislation and Reaction

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If you have ever remodeled or built a house, you can begin to understand a significant issue that has generated both litigation and legislation arising out of defective construction: Do comprehensive general liability (“CGL”) policies provide coverage for construction defects?

Contractors typically purchase performance bonds to cover their work, but these bonds generally have higher premiums than liability policies. While it is not surprising that consumers would prefer the availability of the lower-priced coverage if provided by CGL policies, the cost of those policies may increase if courts and legislatures mandate constructive defect coverage under CGL policies.

Originally published in Law.com on March 5, 2014.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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