Crossmann Communities of North Carolina, Inc. v. Harleysville Mutual Insurance Company

Update - Are contractors covered by a CGL policy in South Carolina?


On January 7, 2011, the South Carolina Supreme Court issued a landmark opinion on insurance coverage for contractors. When damage to property is no more than the natural and probable consequence of faulty workmanship, such that the two cannot be distinguished, the Court held that a contractor does not have coverage under its CGL policy. The Court held that faulty workmanship must result in an “occurrence” for it to give rise to potential coverage. An “occurrence” is defined by the Court as “an accident” and involves a fortuity or “chance” component. For example, the natural and expected consequence of negligently installing siding is water intrusion and damage to the interior. The Court held that there was no fortuity or chance component to these facts and therefore, no “occurrence.” The Court pointed out, however, that a finding of faulty work alone may not preclude coverage. Rather, faulty work may cause an “occurrence” when the event causing damage is fortuitous or by chance and the damage is to non-defective work.

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Reference Info:Decision | State, 4th Circuit, South Carolina | United States

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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