In a recent decision, All American Ins. Co. v. Lampasona Concrete Corp., the Massachusetts Appeals Court affirmed its long standing precedent that a contractor’s general liability insurance is (usually) liable for damages to overlaid material caused by a contractor’s improper construction of a substrate.  In this case, the Owner sued a subcontractor that poured a concrete slab above a vapor barrier to be a substrate to finish flooring materials.  The slab was allegedly negligently constructed, with the fiber reinforcement improperly placed, causing wicking up through the slab that subsequently damaged the finish flooring.

The trial court judge determined that the flooring system (vapor barrier plus slab plus finish flooring) was an integrated product, and as such certain exclusions in the general liability policy applied—specifically exclusion for the replacement of improperly installed work.  The Appeals Court overturned that decision, ruling that only the slab was the subcontractor’s work, and the finish flooring (installed by others) may be covered by the general liability policy.

Despite the best efforts of insurers, many construction defects claims cause some damage to property other than the work of the negligent contractor, which can create avenues to argue for insurance coverage and defense obligations.  Careful analysis paired with persistent advocacy will, in many instances, cause insurers to step up to the plate and defend against defects claims, and often settle them.

Contractors should promptly consult with counsel about notifying their general liability insurer as soon as they are aware of a claimed construction defect.

Attorney Sakib Khan regularly advises owners, architects, engineers, contractors, subcontractors and suppliers on construction defects and insurance defense matters.