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Construction Law

: The South Carolina Construction Law Blog

Insurance Policy Excludes Water Damage From Construction Defects

By Ryan McCabe

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    The Sixth Circuit Court of Appeals ruled that an insurer was not obligated to pay for water damages to a condominium building because the insurance policy specifically excluded coverage for damages caused or resulting from building construction and design defects. TMW Enterprises, Inc. v. Federal Ins. Co., No. 09-1542, (6th Cir. Aug, 25, 2010). Substandard construction on an exterior wall allowed the water intrusion which resulted in damages of $4 million.

    After discovering the water damage and defects, the Plaintiff filed a claim with its insurer to cover the costs of repair. The insurer performed an inspection of the building but refused covered based upon this exclusion. Both the lower court and appellate court agreed with the insurer. The appellate court grappled with the interpretation of the policy, but finally determined that any other explanation of the policy language would render it ambiguous.

    This site and any information contained herein is intended for informational purposes and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Full post as published by The South Carolina Construction Law Blog on October 01, 2010 (boomark / email).