Question...
Our builder client installed a shower during renovations of a house in 2014.
In 2018 their client advised them of water damage to wall and flooring, and investigation showed this to be due to either the failure of a plumbing fitting behind the wall or failure to tighten the fitting properly ± with cost to remediate about $6000.
The builder has made a claim under their general/public liability policy as the sub-contracted plumber who had actually done that part of the job had liquidated their company.
The GL policy included a "defective workmanship" extension, and the claim has been accepted by the insurer under the policy current in 2014, but with an excess of $2500 which applied at that time.
Is the fact that the work was done in 2014 the driver for the determination of the occurrence, or is it when the damage is first noticed, in 2018? Or somewhere in between?
It appears there are several points in time to consider -
i. When installed
ii. When leak started
iii. When the damage started
iv. When `de minimis' threshold reached (± perhaps only applicable when decay has occurred?)
v. When the damage became manifest - when the client noticed it
vi. When the builder was notified
Indeed, as the wording states "however, the insurer will indemnify the insured for resultant property damage arising from defective materials, design or workmanship", would the damage to the walls and floor not in fact be deemed to be resultant upon the failure of the fitting, and only the actual replacement/repair of the plumbing fitting itself fall under the coverage provided by the defective workmanship clause?
Reply... Crossley Gates
You refer to a general/public liability policy. These policies are usually occurrence-based policies and are triggered by property damage occurring during the period of insurance.
Therefore, it is when the damage occurred for which the insured is being held liable that triggers cover. Assuming the leak started soon after installation, it will be back in 2014. Therefore, the $2500 excess will apply.
