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<p class="MsoNormal">The Lexicology newsletter from the BLS had the following post. My impression is that Florida follows the same principles as the Ohio courts. Is that correct?<o:p></o:p></p>
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<p class="MsoNormal" style="text-autospace:none"><b><span style="font-size:10.0pt;font-family:"Arial","sans-serif"">General Contractors Beware: Using Endorsements to Cover Your "Own Work" in the Wake of the Ohio Northern Univ. Decision
<o:p></o:p></span></b></p>
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<p class="MsoNormal" style="text-autospace:none"><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white">While general contractors oversee entire construction projects, specialized subcontractors, such as masons, roofers, electricians
and other trades, often perform those portions of the projects falling within their scope of work. Despite its use of skilled subcontractors, the general contractor remains responsible for the project as a whole. This responsibility has important implications
regarding the general contractors’ insurance coverage in states like Ohio, where the Ohio Supreme Court has ruled that, even where a general contractor utilizes subcontractors, the entire construction project is the general contractor’s work. <b><i>Ohio N.
Univ. v. Charles Construction Servs., Inc.</i>, 2018-Ohio-4057. </b>Accordingly, Ohio law may prevent general contractors from obtaining coverage under their own standard CGL policies for damage to any portion of a project, even if a subcontractor performed
the defective work. This article provides a brief overview of the Ohio Northern decision and its predecessor,<i> <b>Westfield Ins. Co. v. Custom Agri Sys., Inc.</b></i><b>, 133 Ohio St.3d 476, 2012-Ohio-4712</b> and identifies potentially-available endorsements
that cover gaps in coverage related to the <i>Ohio Northern</i> and <i>Custom Agri</i> decisions.<b><o:p></o:p></b></span></p>
<p class="MsoNormal" style="text-autospace:none"><b><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white">A. Claims for Faulty Construction Under Ohio Law.1</span></b><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white"><o:p></o:p></span></p>
<p class="MsoNormal" style="text-autospace:none"><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white">In 2012, the Ohio Supreme Court held that an insured’s claims for defective construction or faulty workmanship arising from its
own work are not covered under a commercial general liability policy: they are “not claims for ‘property damage’ caused by an ‘occurrence’…” <i>Westfield Ins. Co. v. Custom Agri Sys. Ins.</i>,133 Ohio St.2d 476, 2012-Ohio-4712 at Syl. The <i>Custom Agri</i> Court,
however, cited with approval previous Ohio cases that found coverage for consequential damages arising from the defective work, subject to the conditions and exclusions in the policy. For example, under <i>Custom Agri</i>, if a policyholder defectively installed
a roof on a building and the defective roof allowed water to leak in the building and damage the top floor, the cost to repair the roof (the defective work itself) would not be covered, but the water damage to the top floor (the consequential damages) would
be covered.<i><o:p></o:p></i></span></p>
<p class="MsoNormal" style="text-autospace:none"><i><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white">Custom Agri</span></i><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white"> left open the question
of whether defective construction performed by a subcontractor (as opposed to the general contractor itself) could be a covered “occurrence” under the general contractor’s liability policy. In<i> Ohio Northern</i>, the Ohio Supreme Court answered this question.
At issue in <i>Ohio Northern</i> was property damage arising from a subcontractors’ faulty work. The general contractor sought coverage under its commercial general liability policy, its insurer denied the claim, and litigation ensued.
<b>The question ultimately decided by the Ohio Supreme Court was whether the general contractor’s liability policy covered the costs to repair or replace its subcontractor’s defective work.</b> Or, in other words, whether <i>Custom Agri</i>—which held that
repair of a policyholder’s <b>own work</b> was not covered—applied to bar coverage of a <b>general contractor’s</b> claim for a subcontractor’s faulty work. T<b>he Court found that<i> Custom Agri</i> applied and that the general contractor could not recover
under its policy for damages arising from the subcontractor’s faulty work.<o:p></o:p></b></span></p>
<p class="MsoNormal" style="text-autospace:none"><b><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white">B. General Contractors Should Consider Additional Coverage in Light of <i>Ohio Northern</i></span></b><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white"><o:p></o:p></span></p>
<p class="MsoNormal" style="text-autospace:none"><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white">Coverage is available to general contractors for the gaps in coverage that the Ohio Supreme Court’s decisions in <i>Ohio Northern</i> and <i>Custom
Agri</i> identified. Most insurance companies have the ability to offer coverage for property damage caused by a subcontractor through an endorsement (i.e., an extension of coverage) to the general contractor’s policy; however, the coverage that insurers offer
is not standard across the industry. Some examples of insurers’ individual endorsements are:<i><o:p></o:p></i></span></p>
<p class="MsoNormal" style="text-autospace:none"><i><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white">Cincinnati Insurance - GA 4315 03 12 Injury or Damage To Or Resulting From Your Work And Injury Or Damage Resulting From Your
Product.</span></i><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white"> This coverage form states that damage from completed work performed by higher-tiered subcontractor is property damage caused by an occurrence.<i><o:p></o:p></i></span></p>
<p class="MsoNormal" style="text-autospace:none"><i><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white">Westfield Insurance - CG7121 Damage to Your Work.</span></i><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white"> This
form provides coverage for property damage that is the result of work performed by a subcontractor as long as the subcontractor is not a Named Insured and the property damage is unexpected or unintended.<i><o:p></o:p></i></span></p>
<p class="MsoNormal" style="text-autospace:none"><i><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white">CNA - CNA 74906 1 15 Damage to Subcontractors’ Work Endorsement.</span></i><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white"> This
policy form provides coverages for the Named Insured due to unintended or unexpected property damage that is the result of work performed on the Named Insured’s behalf by a subcontractor, consists of your work performed by the subcontractor, or for other property
damaged by the subcontractor’s work.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-autospace:none"><span style="font-size:16.0pt;font-family:"Arial","sans-serif";background:white">If you utilize subcontractors, it is imperative that you review the language of your current insurance policy or consult with your
current insurance broker about the Ohio Northern decision to confirm that you have the proper coverage</span><span style="font-size:10.0pt;font-family:"Arial","sans-serif";background:white"><o:p></o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial","sans-serif";color:#003F72">Howard Allen Cohen<o:p></o:p></span></b></p>
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