In Auto Owners Ins. Co., Inc. v. Newman, 684 S.E.2d 541 (S.C. 2009), the homeowner sued the insured homebuilder for property damage to parts of the home caused by water penetration through defective stucco siding applied by a subcontractor. The complaint alleged breach of contract, negligence, and breach of warranty. Following an arbitration award against the insured finding negligent application of the stucco by the insured’s subcontractor resulting in water penetration property damage to the underlying sheathing and framing, the CGL insurer filed a declaratory judgment action. The court states that the CGL form is identical to the form in L-J. The court held that, while the subcontractor’s negligent application of the stucco did not constitute an “occurrence,” the continuous water intrusion resulting from the negligence did constitute an “occurrence” which resulted in property damage to property other than the subcontractor’s work. The court states: “The facts of this case establish exactly the type of property damage the CGL policy was intended to cover after the 1986 amendment to the ‘your work’ exclusion” adding the subcontractor’s work exception. However, the “work product” is limited to the subcontractor’s work and does not extend to the insured’s work which consists of the entire project. The court rejected the insurer’s argument that the “expected or intended” exclusion applied to the resulting property damage. In its original decision, the court then held that, because the underlying “property damage” could not be assessed or repaired without removing the stucco, the cost of replacing the stucco was covered. On rehearing, the court reversed course on this issue, holding that the cost of removing and replacing the defective stucco–even when the removal is required to repair covered property damage—falls with exclusions m. (“impaired property”) and n. (sistership)
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Mississippi “occurrence”
Caselaw, Insuring Agreement, Mississippi, Occurrence | March 23, 2010