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Laura Foggan Comments on Construction Defect Coverage Ruling

Law360
February 18, 2014

Laura A. Foggan, char of Wiley Rein’s Insurance Appellate Practice, was quoted in a February 14 article in Law360 about a Fifth Circuit ruling on insurance coverage for contractors.

The Fifth Circuit ruled that Acceptance Indemnity Insurance Co. was not obligated to cover a general contractor as an additional insured, according to the article.  The court decided that construction defects were not covered by general liability policies in a case where a subcontractor performed faulty work.  The policy did not cover the contractor, Carl E. Woodward LLC, for property damage after work was completed.

Ms. Foggan said that while the ruling might seem controversial to some, the language in the policy only provided limited coverage to the contractor as an additional insured during ongoing operations.

“I’m sure policyholder advocates will criticize the ruling and protest about the inadequacy of coverage afforded to the general contractor,” Ms. Foggan told Law360.  “But the court was giving effect to the language in the policy.”

“The moral of the story is read your policy,” Ms. Foggan added.  “They just made the wrong purchasing decision.”