Quote of the Day - I like work: it fascinates me. I can sit and look at it for hours. - Jerome K. Jerome
Insurance Company Drafted Its Own Exception To An Exclusion
Tennessee has recently decided that work performed by subcontractors on a project can trigger the general contractor's insurance policy, much to the dismay of Traveler's Insurance Company. Traveler's tried to avoid liability based on this theory that the general hired all the subs, and therefore their work fell within the policy exclusion for faulty workmanship.
Perhaps Traveler's forgot to read its own policy. The Court noted that it wasn't a judicial ruling or legislative statute that mandated the result - it was the insurance company itself. The Court dug into the insurance industry's amendments to its own policy forms, and found that in 1986, the industry itself changed this provision that excluded work for faulty workmanship arising out of the contractor's work.
It added this language to clarify the exclusion, which reads: "This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor."
The general contractor surely thought it was just desserts to have its insurance company hung out to dry by language it drafted.