Contractor liability insurance coverage in construction defect cases is a matter that is hotly litigated. On the one hand, coverage often exists when a defect causes harm to a third party’s property. On the other hand, if the only harm is to the insured contractor’s defective work itself, there is usually no coverage. In between lies controversy. A key area of dispute is where defective work on one part of a construction project causes harm to another part of the same project, a common occurrence. Courts are split on whether coverage exists under such circumstances, although the trend appears to be in favor of coverage.
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