No "Occurrence" in Ohio for Contractor's or Sub-Contractor's Defective Work: An "Occurrence" Must Be Fortuitous.

Author:Zalma, Barry
Position:ON MY RADAR

* Ohio, bucking the majority of court opinions, has interpreted the standard Commercial General Liability (CGL) policy to require for coverage to exist that a loss is fortuitous. An "occurrence" to Ohio courts require that the damage is accidental, fortuitous, and not a normal business risk of a person in the construction business. Policies are interpreted by Ohio to not insure an insured's work itself; rather, the policies generally insure consequential risks that stem from the insured's work.

CGL policies are not intended to protect owners from ordinary "business risks" that are normal, frequent or predictable consequences of doing business that the insured can manage.

In Ohio Northern University v. Charles Construction Services, Inc., Et Al.; Cincinnati Insurance Company, No. 2017-0514, 2018 OHIO 4057, Supreme Court Of Ohio, (October 9, 2018) the Ohio Supreme Court followed its 2012 decision that held that an insurance claim filed by a contractor under its commercial general liability ("CGL") insurance policy for property damage caused by the contractor's own faulty workmanship does not involve an "occurrence" such that the CGL policy would cover the loss. [Westfield Ins. Co. v. Custom Agri Sys., Inc., 133 Ohio St.3d 476, 2012-Ohio-4712, 979 N.E.2d 269, syllabus.]

That decision turned on the CGL policy's definition of "occurrence" as an " 'accident, including continuous or repeated exposure to substantially the same general harmful conditions.' " quoting the policy. Because the CGL policy did not define "accident," the Supreme Court looked to the word's common meaning and concluded that an "accident" involves "fortuity. As a result the Supreme Court held that under the language of the CGL policy, property damage caused by a contractor's own faulty work is not accidental and is therefore not covered.

Here, the question is whether the general contractor's CGL policy covers claims for property damage caused by a subcontractor's faulty work.


In 2008 Ohio Northern University ("ONU") contracted with Charles Construction Services, Inc., to build The University Inn and Conference Center, a new luxury hotel and conference center on ONU's campus.

Charles Construction promised to perform all the work itself or through subcontractors. The contract required Charles Construction to maintain a CGL policy.

Charles Construction obtained from appellant, Cincinnati Insurance Company ("CIC"), a CGL policy. The general liability maximum payout under...

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