The court determined that the Faulty Workmanship Exclusion only barred coverage for damages arising from problems with the property under construction itself and not to losses incurred to correct damage from accidents during construction. See 1756 First Associates, LLC v. Continental Casualty Co., 2011 U.S. Dist. LEXIS 117100 (S.D.N.Y. Oct. 3, 2011).

   A tower crane collapsed at the construction site, causing damage. First Associates tendered the claim to its insurer, Continental. Continental reimbursed First Associates for certain costs arising from damage to and cleanup of the construction site and building stemming from the crane collapse. Continental refused, however, to reimburse First Associates for costs associated with construction delays resulting from the collapse.

   Continental relied upon the Faulty Workmanship Exclusion, which read, in part,

[T]his Policy does not insured against physical loss or damage caused by or resulting from the following:

a. . . . Faulty workmanship or faulty materials . . . .

   First Associates argued that the Faulty Workmanship Exclusion excluded losses arising only from errors or defects in the construction itself and not losses such as delays or cleanup costs arising from equipment failure on the construction site which did not impact the insured property. Continental , on the other hand, argued the Faulty Workmanship Exclusion precluded damages caused by the crane collapse because the collapse was the product of faulty workmanship in manufacturing the crane.

   The court agreed with First Associates. "Faulty Workmanship" referred to the work done by the insured to the insured property itself, not work done by the manufacturer of tools or equipment used on the premises. First Associates did not build the equipment which Continental asserted was the product of faulty workmanship, i.e., the crane. Accordingly, First Associates was entitled to coverage for losses incurred after the crane's collapse.