TX insurers must cover sloppy builders, SC reaffirms

By Rob Luke | Mar 4, 2008

Texas Supreme Court

AUSTIN -- The Texas Supreme Court has re-affirmed an earlier ruling that insurers must defend claims of property damage even where caused by the builders' defective workmanship.

The Supreme Court March 4 overturned, in a per curiam opinion, a Court of Appeals ruling for the insurer in Grimes Construction Inc. v. Great American Lloyds Insurance Co. (docket# 06-0332). The case concerned whether the builder's commercial general liability (CGL) policy covered damage caused by poor construction.

The SC ruled that the current case raised similar issues to the case last August of Lamar Homes Inc. v. Mid-Continent Casualty Co. (docket# 05-0832). There the SC ruled that unintended construction defects could be construed as "property damage and trigger the insurer's duty to defend the CGL policy."

In the present case the trial court had rendered summary judgement for the insurer, concluding that the claim was outside the CGL's scope, and the Court of Appeals upheld. But the SC disagreed, citing its analysis of the Lamar decision that "labels of tort or contract could not override the language of the insuring agreement."

The SC consequently reversed the appellate court ruling without hearing arguments and remanded the case to trial court.

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