The insured general contractor was not covered for alleged faulty workmanship in constructing a home. Allstate Ins. Co. v. Luu, 2017 U.S. Dist. LEXIS 190983 (N.D. Ga. Nov. 17, 2017).
Luu, the homeowner, contracted with Diamond for the purchase of a lot and building of a new home. After the closing and construction, Luu noticed a number of alleged code violations on the property and began having problems with the house. Diamond denied liability, claiming Luu purchased the home "as is." Luu filed suit.
Allstate insured Diamond under a CGL/ Businessowners policy. Allstate denied tender of the Luu suit and sought a declaratory judgment confirming that it had no duty to defend Diamond.
Diamond did not respond to Allstate's motion for summary judgment. The underlying complaint alleged that Diamond's alleged negligence and incompetence were the cause of defects in Luu's home. The policy exempted such damage from coverage. The Georgia Supreme Court had held that "property damage" must refer to property that is nondefective, and to damage beyond mere faulty workmanship. Thus, any claims arising as a result of faulty workmanship would not be covered.
Further, the Builder's Risk Exclusions for Damage to Property, Damage to Your Product; Damage to Your Work; Damage to Impaired Property Not Physically Injured; and Recall of Products were all designed to exclude coverage for defective workmanship by the insured builder causing damage to the construction project itself. Because the damages alleged were to Luu's house, Luu's claims based on the faulty workmanship were not covered by the policy.
Therefore, Allstate's motion was granted.