Question

Stoddard Contractors performs residential construction. Stoddard builds a house for the Nymans in Richardson, TX. In July, 2016, the Nymans notify Stoddard that cracks are appearing in the living room walls. Stoddard sends their construction manager to the Nymans’ home to investigate, and he confirms the existence of the cracks. He tells the Nymans the cracks are due to normal settlement of the home and that simple cosmetic repairs are all that is necessary. In August, 2016, Stoddard purchases a CGL policy from Iowa Casualty. In October, 2016, the Nymans notice the cracking is continuing and the cracks themselves are more severe. They hire an engineer to inspect, and the engineer concludes the cracking is due to an improperly constructed foundation. The Nymans send a demand letter to Stoddard claiming faulty construction and seek the cost to repair the foundation and the house. Stoddard asks Iowa Casualty to cover the claim. (answer in terms of the CGL policy)

Will Iowa Casualty cover the claim? Why or why not? Hint (1): No lawsuit has been filed so there is no Duty to Defend issue. Hint (2): None of the policy’s exclusions apply.

Answer 1

Considering that they have agreed upon the claim over the construction contracts done before the insurance contract, Lowa Casualty will cover the loss. As Stoddard company has acted in good faith & followed what any rational person will do.

Although if they haven't agreed upon it before the insurance contract than it won't be covered.

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