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Complaint Facts Must Be Specific To Trigger CGL's Property Damage Coverage

Friday, September 21, 2012 05:52 am


Insurance -- CGL

Lagestee-Mulder, Inc. v. Consolidated Ins. Co., 2012 U.S. App. Lexis 13004 (7thCir. June 26, 2012)

A CGL insurer has no liability for property damage to the structure being constructed--only to other property. And if the underlying claim doesn't specify that damage to other property, coverage is not triggered.

Lagestee-Mulder, Inc. (LMI) was the general contractor on a project to construct a multi-story office building in Frankfort, Illinois. As an additional insured on a commercial general liability (CGL) insurance policy associated with the project, LMI was covered for sums for which it became legally liable because of property damage caused by an "occurrence." Nevertheless, insurer Consolidated Insurance Company (Consolidated) denied coverage for the project owner's claims related to water infiltration and construction defects that occurred during the later stages of construction. A district court found that Consolidated had not breached its duties under the policy, and that ruling held on appeal.

The question before the court was whether the owner's complaint alleged "property damage" covered by the CGL policy. "Where the underlying suit alleges damage to the construction project itself because of a construction defect, there is no coverage"--but "where the complaint alleges that a construction defec [...]

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