In a long-awaited decision that helps contractors obtain coverage for construction defects, the Oregon Supreme Court in Twigg v. Admiral Ins. Co. 371 Or. 308 (2025) ruled that coverage under a commercial general liability policy may exist even when the claims asserted in the complaint arise from breach-of-contract—if the underlying facts still support a potential tort claim.
The combined efforts of the Associated General Contractors of America (AGC) and the American Subcontractors Association (ASA)—which intervened as amici curiae due to the impact on contractors—contributed to this reversal on coverage that the trial court and court of appeals had previously entered in the case.
How the Twigg Case Unfolded
In their complaint, the homeowner plaintiffs—the Twiggs—identified multiple construction defects, including a garage floor that cracked and sloped inward, directing water toward the house.
The builder hired a subcontractor to apply a lightweight concrete overlay product but allegedly did not follow the manufacturer’s specifications. The Twiggs claimed the builder breached their repair agreement and proceeded with arbitration. The arbitrator found that the work had been defective and awarded $150,000.
Lower Courts Rule for Insurer—Oregon Supreme Court Reverses
Unable to collect on the judgment against the builder, the Twiggs pursued coverage under the builder’s commercial general liability (CGL) policy effective during the repairs. The insurer—Admiral Insurance Company—denied coverage, arguing the award stemmed from breach of contract and thus did not fall under the policy’s definition of an “occurrence.” Both the trial court and the Oregon Court of Appeals agreed that no “occurrence” took place if the damages arose solely from breach of contract claims.
The Oregon Supreme Court reversed, citing arguments presented by the ASA. While the Court agreed that damages caused solely by breach of contract are generally not covered, it concluded that a tort claim need not be specifically pleaded for coverage to apply. Instead, the Court found that an “accident” in the insurance context is much broader and can include unintended property damage resulting from conduct that—although grounded in contract—also supports liability under tort law.
Why the Decision Matters for Contractor Policyholders
The Court reaffirmed its commitment to the rule that when a policy term—like “accident”—is ambiguous, the ambiguity must be resolved against the insurer and in favor of coverage. This holding is a victory for all contractor policyholders sued for damages, where plaintiffs assert only breach of contract claims, but potentially covered tort claims could have also been alleged.
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