Court rules that faulty workmanship is not an 'occurrence' under a CGL
In 1989, a South Carolina developer hired a contractor to perform site-development work and build roads for a new subdivision. The contractor, in turn, hired subcontractors to perform most of the work. The project was completed in 1990; by 1994 the roads had deteriorated. That led the developer to sue the contractor for breach of contract, breach of warranty and negligence.

In 1997, the lawsuit was settled for $750,000. Subsequently, the contractor sought indemnification from four insurers that had issued CGL policies to it between 1989 and 1996. Three of the carriers contributed $362,500 to the settlement; the fourth, however, refused to indemnify.

The contractor and the three carriers that participated in the settlement sued the holdout, seeking contribution and indemnification for all defense costs. A circuit court referred the action to a special master, who found that the damage to the roadway system was covered under the contractor's CGL policy. The special master said the damage constituted an “occurrence.” It also said the “expected or intended” and “your work” exclusions did not apply, since the work was performed by subcontractors. Finally, the special master found that the CGLs' “policy years” ran from 1989 to 1996. Because the policy issued by the contractor's insurer covered the two-year period from 1990 to 1992, the special master said it owed the other carriers a two-year contribution, valued at $103,571.42.