OHIO DECISION PARTS WAYS WITH THE NORM AS TO CONSTRUCTION DEFECT COVERAGE FOR GENERAL CONTRACTORS


On October 9, 2018, the Ohio Supreme Court issued an important decision in Ohio N. Univ. v. Charles Constr. Servc., Inc., Slip Opinion 2018-Ohio-4057.  Departing from the national majority view, the Ohio Supreme Court held that a general contractor’s commercial general liability policy does not cover claims for property damage caused by a subcontractor’s faulty work. Specifically, the Court reasoned that faulty work is not accidental or “fortuitous,” as contemplated within the policy’s definition of an “occurrence” triggering coverage.”

This topic has been hotly debated in South Carolina after the Crossman decision. Following Crossman, a South Carolina statute was enacted. The statute stated that the definition of “occurrence” in general liability policies includes property damage “resulting from faulty workmanship, exclusive of the faulty workmanship itself.” See S.C. Code § 38-61-70 (2011). The South Carolina Supreme Court has ruled that this statute may only be applied to general liability insurance contracts executed on or after the effective date of the statute – May 17, 2011. Any retroactive application is unconstitutional. See Harleysville Mut. Ins. Co. v. State, 401 S.C. 15 (2012).

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