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Court of Appeals Reiterates That Under CGL Policies, Insured’s Damage to Its Own Work Product Is Not an “Occurrence”

Insurance Coverage / April 9, 2019


In the context of commercial general liability (“CGL”) coverage, it is “an established principle of law that an occurrence cannot include damages for the insured’s own faulty workmanship.Skanska USA Building Inc v Amerisure Ins Co, unpublished opinion per curiam of the Court of Appeals, issued March 19, 2019 (Docket No. 340871), p 10.

This rule has endured in Michigan since Hawkeye-Security Ins Co v Vector Construction Co, 185 Mich App 369 (1990), despite subsequent changes to the standard CGL form’s definition of “occurrence.”

Insurers have long argued that such an interpretation is necessary in order to prevent CGL policies from being converted into performance bonds or warranties. See Westfield Ins Co v Bellevue Holding Co, 856 F Supp 2d 683, 694 (ED Pa 2012); Wis Label Corp v Northbrook Prop & Cas Ins Co, 233 Wis 2d 314, 343 (Wis 2000) (“A CGL policy is not a performance bond; it provides coverage for tort damages but not for economic loss resulting from contractual liability.”).

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