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The Importance of Understanding Coverage Limitations Part 1

Sensible contractors safeguard themselves from liability surfacing from their work on a construction project by retaining standard commercial general liability (CGL) insurance. However, as your construction attorneys in Orlando, we know that contractors are sometimes unaware of the fact that their CGL policy typically does not provide coverage for claims by unhappy owners for the reimbursement to fix or replace supposedly damaged work. In this 2-part article we will discuss the importance of a contractor’s coverage limitations, and what they mean. To view the second half of this article, please visit Part 2.

Claims From Dissatisfied Owners

These claims, which present serious exposure to the contractor, are controlled by the contract that exists between the contractor and client. Because of this, the terms of the warranty and indemnification language in construction contracts are extremely important, although typically neglected. It is crucial for contractors to be aware of the limitations of their liability insurance coverage, and make certain to take heed of it in the drafting of their contracts; which is why it’s recommended that contractors seek the counsel of a construction attorney in Orlando when drafting a construction contract.

What Is The CGL Policy Agreement?

A CGL policy is typically written into a construction contract to protect any liability for claims that ensue from accidents caused by the insured. The CGL has an Insuring Agreement in the policy that states that the policy will cover any bodily injury and property damage caused by an “occurrence,” which is defined by the policy as “an accident.”

Are There Any Exceptions?

We know that it’s not a contractor’s intention to cause a construction defect, and to that extent defective work is also considered an accident; hence also a protected CGL policy occurrence. Nevertheless, both insurance companies and courts can often be in agreement that deconstruction damages that derive from flawed workmanship alone are not considered an accident.

To speak with one of our construction lawyers in Orlando, or for more information on our construction law services, please contact our office at 407.378.6575 or submit our contact request form to request a consultation.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

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