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Ill. Justices Say Defect Suit’s Claims Fall within CGL Policy

Law360 Insurance Authority

The Illinois Supreme Court ruled Thursday that a town house owners association's allegations of property damage from a subcontractor's unintentional faulty work fall within the coverage of its commercial general liability policy, potentially triggering an insurer's defense obligations.


In seeking reversal of a ruling from Illinois' First District, the carrier contended that property damage caused by a contractor's faulty work was subject to a business risk exclusion in a CGL policy issued to H&R Exteriors Inc. According to the opinion, M/I was named as an additional insured on H&R's policy.

Policyholder attorney Seth Lamden, a partner at Blank Rome LLP in Chicago who is not involved with the case, told Law360 the ruling is a "welcome decision for Illinois contractors."

"Illinois has finally joined the overwhelming majority of jurisdictions finding that inadvertent defective construction work can constitute an 'occurrence' for purposes of CGL coverage," he said. "This ruling is consistent with the plain language of post-1986 CGL policies, which contains no language requiring damage to property outside the scope of the work of the insured to trigger coverage and contains no language limiting coverage to tort damage."

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"Ill. Justices Say Defect Suit’s Claims Fall within CGL Policy," by Shane Dilworth was published in Law360 Insurance Authority on November 30, 2023.