No Coverage for Fired Contractor

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In Clarendon American Ins. Co. v. General Security Indem. Co., 2011 WL 1143453 (Cal. App. March 30, 2011), the California Court of Appeal held that an insured’s unilateral termination from a construction contract before its work was complete did not satisfy a products-completed operations hazard coverage provision requiring an insured’s work be completed or abandoned.

Clarendon American sued General Security for declaratory relief and contribution after settling an action against Hilmor Development, an insured of both insurers. Clarendon contended that the underlying action against Hilmor triggered the General Security policy’s “products-completed operations hazard” coverage. The trial court, however, granted summary judgment for General Security, and the Court of Appeal affirmed.

The products-completed operations hazard provision at issue provided coverage for “bodily injury” or “property damage” arising out of Hilmor's work or product, with the exception of “[w]ork that has not yet been completed or abandoned.”

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