The South Carolina Construction Defect Blog has provided ample opportunity for the author to discuss the treatment of construction defects as being covered events which often “trigger” coverage under a standard policy of commercial general liability insurance. Our discussions have focused on South Carolina decisions such as 2003 LJ v. Bituminous, as well as the Auto Owners v. Newman saga in which it became well settled that our state was leaning towards recent national trends which construed faulty workmanship to be an “accident”, or unintended occurrence and, therefore, an “occurrence”. Assuming that construction defects are, in fact, occurrences, the only issue to consider involves whether or not an occurrence has in fact constituted “property damage”. In a recent decision by our State’s highest court, faulty workmanship is no longer an “occurrence”, thus stopping all analysis as to whether property damage has occurred.
In taking steps which suggest that the much maligned LJ opinion was the prevailing wisdom, South Carolina’s Supreme Court has made a loud statement which will certainly cause controversy within our borders as homeowners and builders will be affected directly by this decision. In pertinent part, the court reasoned that the natural consequence of faulty construction is property damage and this is, therefore, not an accident. There is no “fortuitous event” as property damage is a natural result of faulty workmanship.
While the court’s opinion is based on sound reasoning, it would appear that the consequences have the possibility to be very far reaching and should be considered by the legislature, if not the courts. To be continued.