Sorting out whether the contractor had coverage for alleged construction defects under the subcontractor's policies was the issue in Travelers Cas. and Sur. Co. v. Dormitory Auth., State of New York, 2010 U.S. Dist. LEXIS 79024 (S.D. N.Y. July 30, 2010).

   Trataros Construction, Inc. was the general contractor on the project.  Trataros contracted with Crocetti to install an epoxy terrazzo flooring throughout various public spaces within the building.  Due to design or construction errors, some portions of the concrete subfloor were insufficiently level to allow for the installation of the epoxy terrazzo flooring directly on the concrete subfloor.  A change order granted the additional cost of installing a self-leveling floor fill (the "underlayment") on top of the concrete subfloors.  Bartec Industries, Inc. was the subcontractor for furnishing and installing the underlayment.  Bartec was required to add Trataros as an additional insured under Bartec's CGL policies.

   Bartec installed the underlayment.  Thereafter, problems with the completed flooring system began to manifest.  Hollow spots were detected in the underlayment, and the epoxy terrazzo did not properly bind to the underlayment.  The epoxy terrazzo flooring and underlayment had to be removed and replaced. 

   Trataros was sued by the owner for construction defects, including the defective installation of the flooring system.  The owner sought damages of $20 million on the construction defect claim and a further $8 million on the delay, disruption, and impact claims.  Trataros sought coverage under Bartec's policies.  The Insurers denied coverage and eventually moved for summary judgment on various grounds.  The district court granted summary judgment to the Insurers.  

   One Insurer was granted summary judgment because of a failure to provide adequate notice of an additional insured.  An endorsement to the policy permitted inclusion of a general contractor as an additional insured where a certificate of insurance showing that organization as an additional insured had been issued and received by the Insurer.  It was undisputed that no certificate of insurance was ever issued to Trataros.  Because this condition precedent was not satisfied, Trataros was not an insured within the meaning of the policy.

   Even if Trataros was an additional insured, coverage was only provided for the additional insured's vicarious liability for acts or omissions of the named insured.  Here, Bartec ceased its work installing the underlayment on Trataros' behalf before the policy took effect.  While Trataros argued that the "continuous trigger" doctrine mandated coverage, this doctrine applied to the unrelated question of determining when "property damage" occurs, not whether the construction operations by the named insured were "ongoing." 

   A second Insurer prevailed on summary judgment because its policy included an exclusion for coverage of known-injury-or-damage.  If an insured party became aware that property damage had occurred or had begun to occur prior to the policy period, then the insured could not seek coverage for that property damage, even if such damage continued during the policy period.  Here, it was undisputed that Trataros was put on formal notice of the flooring problem when it was advised prior to commencement of the policy that portions of the terrazzo flooring installation had separated and areas of delamination of layers existed. 

   Finally, considering another Insurer's policy, the court agreed that, when read jointly, the three business risk exclusions – Exclusion j (5), Exclusion j (6), and Exclusion m – were fatal to Trataros' claim.  Therefore, no coverage was available for the alleged flooring failure under the policy.