Bad Faith Issues and Meaning Of “Occurrence” Regarding Construction Defect Claims

2013-07-12 | Joseph M. Busher

Category: Insurance

Joseph M. Busher

The Supreme Court holds that unintended construction defects may form the basis of an “occurrence” or “accident” under commercial general liability insurance policies.  In response to a certified question from the United States District Court for the District of Alabama, the Supreme Court states that allegations of unintended defective construction work by a subcontractor that damage to non-defective property may constitute an “occurrence” resulting in “property damage” under certain circumstances. However, defective work standing alone or repairs to that defective work do not constitute property damage and were not covered under the policy at issue.  The court also addressed the issue of whether an insurer’s alleged bad faith in investigating a claim could provide a basis for a cause of action for bad faith under Connecticut law.  The court rejected such a cause of action, stating that under Connecticut law “a bad faith action must allege the denial of the receipt of an express benefit under [a] policy.”  The court followed the majority of jurisdictions that had rejected bad faith claims based solely upon alleged bad faith in the investigation of a claim.  Thus, if there is no duty to defend or indemnify, there can be no bad faith under Connecticut law.  Capstone Building Corp. v. American Motorists Ins. Co., SC 18886 (June 11, 2013)

The lawyers at Jackson O’Keefe, in Hartford, represent clients throughout Connecticut in a wide array of coverage disputes. The firm represents many major insurance carriers as well as individuals, filing declaratory judgment actions, drafting coverage opinions, and handling bad faith denial claims. Jackson O’Keefe is dedicated to the practice of insurance law. Our mission is to provide all clients with prompt, innovative and cost-effective solutions to insurance claims and litigation, while adhering to the highest professional standards. The firm has extensive experience investigating, researching, analyzing, and litigating insurance coverage disputes. Founded by a former commissioner of the Connecticut Insurance Department, the firm handles extra-contractual claims, coverage analysis and litigation, as well as regulation and lobbying matters related to the insurance industry. The law related to bad faith and unfair insurance practice claims is a continually developing area in Connecticut and nationally. Subrogation, assignment, and a host of equitable issues may be involved as well. The attorneys at Jackson O’Keefe have the experience and capabilities to navigate through these areas to a successful resolution. The firm also provides experienced insurance defense counsel to companies throughout the area.

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