Every day, court decisions are made that can impact your company, the industry it operates in, and the ways you can protect your employees. It’s important to stay up to date on what decisions are made, and how they will affect the way you run your business.
One of these in the past year was Nash Street, LLC v. Main Street America Assurance Company No. 20389, 2020 WL 5415325 (Conn. 2020). It tackled the following question:
Do exclusions k(5) and k(6) absolve an insurer of its duty to defend its insured for allegations of faulty workmanship?
No, under Connecticut’s broad duty to defend standard. Plaintiff, represented by SDV, sought a defense for a suit alleging faulty workmanship after part of a homeowner’s structure collapsed while work was performed on the foundation. The insurer denied coverage to the plaintiff, arguing that there was no coverage for “that particular part of any property that must be restored, repaired, or replaced because ‘your work’ was incorrectly performed on it.” The Connecticut Supreme Court sided with the insured, holding that exclusions k(5) and k(6)(which are identical to ISO GL exclusions j(5) and j(6)) did not unambiguously preclude coverage because it was at least possible that the exclusion was intended to apply only to damage in the area of the dwelling where the insured performed work. Because the contractor only worked on the basement, but damage occurred to the entire structure, coverage was not unambiguously excluded. As part of its analysis, the Court also articulated a new and more expansive test for the duty to defend, holding that an insurer owes a defense whenever there is “legal uncertainty,” meaning that it is unclear how a court might interpret a policy’s relevant language.
To read more about this case, you can view the documents here.