The Alabama Supreme Court Broadens the Definition of “Occurrence” in a General Contractor’s Commercial General Liability Policy in Owners Insurance Company v. Jim Carr Homebuilder, LLC


On March 28, 2014, the Alabama Supreme Court withdrew its September 20, 2013 opinion and substituted a new decision in Owners Ins. Co. v. Jim Carr Homebuilder, LLC, 2014 WL 1270629 (Ala. Mar. 28, 2013). In its new decision, the Alabama Supreme Court held that the definition of “occurrence” in a general contractor’s general commercial liability policy (“GCL”) covered damage to the structure due to exposure caused by of faulty workmanship. Jim Carr, 2014 WL 1270629 at *5. Moreover, the court narrowly defined the “your loss” exclusion as precluding the recovery of costs to repair damage caused by faulty workmanship only where the policy declarations did not include coverage for “products-completed operations hazard.”

Background and Procedural Posture -

This case stems from Jim Carr Homebuilder, LLC’s (“JCH”) construction of a new home on Lay Lake in Wilsonville, Alabama in January 2006. Construction of the nearly $1.2 million structure was completed in early 2007 (the “Project”). However, almost immediately, the home began experiencing significant damage from water intrusion. JCH undertook efforts to remediate and fix the water damage, but from all accounts these efforts were unsuccessful. After remediation attempts failed, the homeowners sued JCH for breach of contract, fraud, and negligence/wantonness on May 13, 2008 (“Primary Action”).

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