Auto Owners Insurance Company, Inc. v. Newman

Are Contractors Covered under a CGL policy in South Carolina?


September 14, 2009

The South Carolina Supreme Court Court Issues

New Newman Opinion on CGL Coverage for Contractors

The South Carolina Supreme Court withdrew its initial opinion dated March 10, 2008 and substituted a new opinion on September 8, 2009 (Auto-Owners Ins. Co., Inc. v. Newman. Op. No. 26450). In the substituted opinion, the Court held that a subcontractor’s negligent work which damaged the GC’s other work is an "occurrence" covered under a GC’s CGL policy, but that the cost to repair the subcontractor’s defective work may not be covered under the policy. As an example, a roofing subcontractor’s "negligent" application of shingles which causes water damage to framing materials installed by another sub may be covered. The cost to repair the damaged framing may be covered, but the cost to remove and replace the shingles may not be covered. In a dissenting opinion, Judge Pleicones argues that faulty work by a subcontractor causing any damage to the GC’s work product, i.e. any part of the house, is not an "occurrence" and not covered under a GC’s CGL policy. The substituted opinion follows a line of cases that define insurance coverage for contractors and the obligations of CGL carriers that issue insurance in South Carolina. The application of the law, as defined by the string of cases, is dependent on the facts of each case. Click here for a link to the substituted Newman opinion.

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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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