Defense Counsel Journal - International Association of Defense ...

Raising the Roof Page 469such risks as a matter ofinsurance underwriting. 7Quoting Dean Roger Henderson,who espoused the principle in theNebraska Law Review, the court noted:The risk intended to be insured isthe possibility that the goods,products or work of the insured,once relinquished or completed,will cause bodily injury ordamage to property other than tothe product or completed workitself, and for which the insuredmay be found liable. The insured,as a source of goods or services,may be liable as a matter ofcontract law to make good onproducts or work which isdefective or otherwise unsuitablebecause it is lacking in somecapacity. This may even extendto an obligation to completelyreplace or rebuild the deficientproduct or work. This liability,however, is not what thecoverages in question aredesigned to protect against. Thecoverage is for tort liability forphysical damages to others andnot for contractual liability of theinsured for economic lossbecause the product or completedwork is not that for which thedamaged person bargained.An illustration of thisfundamental point may serve tomark the boundaries between“business risks” and occurrences7 Weedo, 405 A.2d at 791.giving rise to insurable liability.When a craftsman applies stuccoto an exterior wall of a home in afaulty manner and discoloration,peeling and chipping result, thepoorly-performed work willperforce have to be replaced orrepaired by the tradesman or by asurety. On the other hand, shouldthe stucco peel and fall from thewall, and thereby cause injury tothe homeowner or his neighborstanding below or to a passingautomobile, an occurrence ofharm arises which is the propersubject of risk-sharing asprovided by the type of policybefore us in this case. 8Another prime example of theextreme on the “occurrence” spectrum isthe recent decision of the KentuckySupreme Court in Cincinnati Insurance v.Motorists Mutual Insurance. 9 InMotorists Mutual, the Court considered aclaim against the insured generalcontractor brought by a couple whichpurchased a home built by the insured(the decision is silent regarding whetherthe contractor used subcontractors toperform any of the work). Relying on thefortuity principle, the Court held simply:Inherent in the plain meaning of“accident” is the doctrine offortuity. Indeed, “[t]he fortuityprinciple is central to the notionof what constitutes insurance....”8 Roger Henderson, Insurance Protection forProducts Liability and Completed Operations,What Every Lawyer Should Know, 50 NEB. L.REV. 415, 441 (1971).9 306 S.W.3d 69 (Ky. 2010).