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Page 486 DEFENSE COUNSEL JOURNAL–October 2012damage to other property which isnot the subject of the insured’s workis covered as an “occurrence.”Insured’s work covered? No.North Carolina: Production Systems,Inc. v. Amerisure Ins. Co., 605 S.E.2d663 (N.C. Ct. App. 2004).Occurrence? Yes, implicitly. Thecourt decided the case based upon thelack of property damage and appearsto have assumed the existence of an“occurrence.”Insured’s work covered? No.Damages resulting from the insured’sdefective construction are not“property damage” but instead thecost to repair the defects in theinsured’s own work product.North Dakota: Acuity v. Burd & SmithConst., Inc., 721 N.W.2d 33 (N.D. 2006).Occurrence? Yes. Faultyworkmanship which causes damageto property other than the insured’swork is an accidental “occurrence.”Insured’s work covered? No.Damage to the insured’s work isexcluded by the business riskexclusions. Only damage to otherproperty is covered.Insured’s work covered? No. Onlydamage to property which is not thesubject of the insured’s work iscovered.Oklahoma: Undecided.Oregon: Oak Crest Const. Co. v. AustinMutual Ins. Co., 998 P.2d 1254 (Ore.2000).Occurrence? No. Damage which isredressable under pure contractprinciples cannot be an accident andtherefore is not an “occurrence.”Insured’s work covered? No.However, damage to other propertyas a result of the insured’s breach ofcontract may be covered.Pennsylvania: Kvaerner Metals Div. ofKvaerner U.S., Inc. v. Commercial UnionIns. Co., 908 A.2d 888 (Pa. 2006).Occurrence? No. Defective workstanding alone lacks the element offortuity necessary to constitute anaccident.Insured’s work covered? No. 42Rhode Island: Undecided.Ohio: Heile v. Herrmann, 736 N.E.2d566 (Ohio Ct. App. 1999).Occurrence? No. Faultyworkmanship standing alone lacksfortuity and therefore is not anaccident, and not an “occurrence.”42 See Nationwide Mutual Ins. Co. v. CPBInternational, Inc., 562 F.3d 591 (3d Cir.2009); Millers Capital Ins. Co. v. GamboneBrothers Development Co., 941 A.2d 706 (Pa.Super. 2007).
Raising the Roof Page 487South Carolina: CrossmannCommunities of North Carolina, Inc. v.Harleysville Mutual Ins. Co., No. 26909,2011 WL 3667598 (S.C. Jan. 7, 2011).Occurrence? No. Defectiveconstruction, which only results indamage to the insured’s work, is nota claim for “property damage” andtherefore not an “occurrence.”However, if the insured’s defectivework results in damage to otherproperty, that damage is a covered“occurrence.” 43Insured’s work covered? No.South Dakota: Corner Const. Co. v.United States Fidelity & Guaranty Co.,638 N.W.2d 887 (S.D. 2002).Occurrence? Yes. To the extent asubcontractor’s work results indamage to the insured’s work, it isthe result of an “occurrence,”because it was not expected orintended by the insured.Insured’s work covered? Yes, butonly if it is the result of asubcontractor’s faulty work. If thedamage to the insured’s work is aresult of the insured’s faulty work,there is no “occurrence.”Tennessee: Travelers Indemnity Co. ofAm. v. Moore & Assoc., Inc., 216 S.W.3d302 (Tenn. 2007).Occurrence? Yes. Where damage tothe insured’s work was caused by asubcontractor’s defective work, thedamage was accidental from theinsured’s standpoint and therefore an“occurrence.”Insured’s work covered? Yes, butonly if it is the result of asubcontractor’s faulty work. If thedamage to the insured’s work is aresult of the insured’s faulty work,there is no “property damage.”Texas: Lamar Homes, Inc. v. Mid-Continent Casualty Co., 242 S.W.3d 1(Tex. 2007).Occurrence? Yes. As long as thedamage in question results from anaccident, i.e., negligence by theinsured, and is not intentional, thedamage resulted from a covered“occurrence.” There is no logicalbasis to determine whether thedamage was accidental based simplyon whether the property damagedwas the work product of the insuredor some other property.Insured’s work covered? Yes, as longas the work was done by asubcontractor. The court held thatthe subcontractor exception to the“your work” exclusion resurrectedcoverage which would otherwise bebarred.43 See L-J, Inc. v. Bituminous Fire & MarineIns. Co., 621 S.E.2d 33 (S.C. 2004).
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