The Ohio Supreme Court has again ruled that owners, contractors and subcontractors in Ohio have little protection from construction defects. The construction industry has long relied upon Commercial General Liability (“CGL”) policies to protect against personal injury or property damage losses, including those flowing from construction defects. Large premiums are paid every year to the insurance industry to attempt to insure against risk.
But the Ohio Supreme Court in Ohio N. Univ. v. Charles Constr. Servs., Inc., 2018-Ohio-4057 recently ruled that a subcontractor’s faulty workmanship is not “fortuitous” and therefore not an “occurrence” under a CGL policy. Therefore, a subcontractor’s faulty work is not covered as an insured risk under a typical CGL policy.
This case means that those relying upon a CGL policy to provide protection from faulty workmanship may have only illusory protection and be operating uninsured.
The Ohio Supreme Court stated that if this decision is a problem for the industry and the citizens of this state, the legislature could change the law and state that a CGL policy in Ohio shall define “occurrence” to include “property damage resulting from faulty workmanship.” Until it does so, all players in the construction process run the risk that construction defects are uninsured.