Philadelphia Construction Law Blog

Although regular risk assessments and re-evaluations of insurance coverage are generally a good idea, it’s not uncommon for construction companies to take the approach of renewing their existing insurance policy when it comes up for renewal. Some policies – particularly specialty policies – have renewal clauses in them that sophisticated companies should be aware of when renewing their insurance though. A recent decision by the Third Circuit Court of Appeals in Philadelphia sheds some light on this issue.

In one of the most impactful decisions of the last decade for both the insurance and construction industries, the Pennsylvania Supreme Court ruled in Kvaerner U.S., Inc. v. Commercial Union Insurance Co., that defective work was not an occurrence under a commercial general liability insurance policy when the underlying claims “triggering” coverage sound in contract. Courts in other jurisdictions, however, have been methodically swinging in the other direction. It may ultimately spell the end of the narrow reading the Kvaerner decision imposes on CGL policies in Pennsylvania.

After the City of Philadelphia recently passed new ordinances directing the display of contractor licenses, the use of permits, and the posting of job sites for all contractors, further requirements to perform demolition or construction work inside the City limits went into effect on January 1, 2014.

Construction companies and owners in Delaware have complained about the soaring costs associated with workers’ compensation policies and claims for years. New legislation has given them some sought after relief.

The issue of whether occurrence-based CGL policies provide coverage for property damage sustained as a result of faulty workmanship by contractors has been treated unevenly throughout the country. However, a recent decision by the Third Circuit Court of Appeals applying Pennsylvania law provided greater clarity on how occurrence-based policies are to be interpreted in the context of construction projects. The decision also left the door open to creative attorneys who may try to recover on such policies from a different angle though.

In a recent opinion, the Pennsylvania Supreme Court significantly broadened an employer’s responsibility as a “statutory employer” under the Worker’s Compensation Law. In Six L’s Packing Co. v WCAB, a produce company subcontracted the trucking of its harvested produce to its warehouses. Although the trucking subcontractor had agreed to provide worker’s compensation insurance to its employees, it failed to do so. One of the subcontractor’s drivers was injured in a motor vehicle accident while transporting the employer’s produce. The driver filed a worker’s compensation claim against the produce company alleging that it was his “statutory employer” under the worker’s compensation law.

Does a contractor’s insurance company have a duty to defend the contractor in a lawsuit for faulty workmanship where the contractor has evidence that it did not cause the property damage? A Pennsylvania Court recently held that an insurer had no duty to defend under these facts.