AUTO-OWNERS INSURANCE COMPANY v. CHORAK & SONS, INC. (N.D. Ill., Doc. No. 07 C 4454)
Recently, we have reported on cases related to claims arising out of construction regarding converage under a CGL policy. Here is another that found no coverage under a standard CGL policy. These cases emphasize the need to evaluate their risk allocation and coverage needs for claims arising out of claims stemming from faults with the work that’s performed.
In Auto-Owners, the CGL carrier filed a declaratory action asserting that it did not owe 
coverage under a standard CGL policy to a subcontractor. The subcontractor wanted coverage in a suit filed against it for breach of contract, defective workmanship and negligence. The sub’s work on the project that led to the underlying dispute stemmed from the sub’s attempt to fix the sill plate at the top of the foundation. The sub was lifting the existing structure to get at the plate and the building slid off its foundation. The damage to the building was extensive and the city of Chicago ordered the building demolished. The GC sued the sub and the sub looked to its CGL carrier for coverage.
The court did not address the question of the accident’s categorization as an “occurrence” or as “property damage” under the policy. Instead, it looked beyond any argument that the action fell under the policy as both an “occurrence” and “property damage” (a contention not assumed in our previous entry on Lyerla) and found that two exclusions in the policy barred coverage:
“Even if the home sliding off of its foundation constitutes “property damage” resulting from an “occurrence,” Auto-Owners is not obligated to defend or indemnify Defendants for the resulting damage because any such damage fell under exclusions j(5) and j(6) to the policy. Exception j(5) excluded damage to the “particular part” of property on which Chorak was “directly or indirectly” performing operations if the damage arose from those operations, and exclusion j(6) excluded damage to the “particular part” of property that must be restored because Chorak's work was incorrectly performed on it.” Slip Op. at 2.
The court granted summary judgment to the plaintiff and found that no coverage existed due to the exclusions. Again, while no one plans on an accident affecting the project, or expects damage to occur, having coverage for this kind of event should be considered.
