South Carolina Court Finds That the "Your Work" Exclusion Precludes Coverage for Damage to Work of General Contractor and His Subcontractors
On April 9, 2012, in Builders Mutual Insurance Company v. OakTree Homes, the Rock Hill Division of the South Carolina District Court determined that a general contractor's CGL policy did not cover the damages awarded in the underlying residential construction case for a number of different reasons:
- The punitive damage endorsement precluded coverage for the award of punitive damages.
- Damages awarded for purely economic injury, as opposed to property damage, were not covered by the policy. Specifically, the damages awarded for fraud were not covered under the policy because there was no property damage resulting from the alleged false representations.
- Damages awarded for cracks in the back patio were not covered because the cracks resulted from defects in the patio itself (and are, therefore, not covered pursuant to the analysis in Crossmann Communities of NC v. Harleysville Mutual Insurance).
- Damages at the front of the house resulting from excessive settlement due to inadequate compaction of the soil were not covered because of the "Your Work" exclusion (discussed in more detail below).
The policy at issue contained a "Your Work" exclusion and an endorsement which removed the subcontractor exception to the "Your Work" exclusion. The Court held that the "Your Work" exclusion precluded damages resulting from soil compaction because the soil compaction was performed by the general contractor or the general contractor's subcontractors and the injured property (stairs, walkway, and driveway) were installed by the general contractors or the general contractor's subcontractors. Therefore, there was no damage to the work of a third party.