Double AA Builders, Ltd. v. Preferred Contractors Insurance Company, LLC involved a general contractor’s attempt to obtain Additional Insured coverage from a subcontractor’s insurer for the cost of repair for the subcontractor’s faulty work. The general contractor settled claims brought against it by a property owner which was based on the improper installation of a built-up roof by the roofing subcontractor. The built-up roofing failure caused damage to work performed by other subcontractors. The general contractor sued the roofing subcontractor and its insurer for indemnity. The general contractor had sought only the cost of repair of the built-up roofing and not the cost of damage to other property. The roofer defaulted. The general contractor and the roofer’s insurer both moved for summary judgment on whether there was coverage.
The policy excluded coverage for damages based on improper performance of work “by you or on your behalf.” The policy also contained an exception to that exclusion for work “performed on your behalf by a subcontractor.” The trial court granted summary judgment to the general contractor and found that it was entitled to coverage as an Additional Insured on the roofer’s policy because the “subcontractor exception” prevented the “your work exclusion” from applying. The Court of Appeals reversed. It ruled that the “subcontractor exception” in the policy referred to a subcontractor of the Named Insured only. Any Additional Insureds on its policy would only be entitled to coverage for repair to work by the downstream subcontractors of the Named Insured, and not for the Named Insured’s own work.
This decision came out a month after oral argument, which is unusually quick. This decision interprets common policy language. Its impact is limited to claims for repair of the Named Insured’s work itself and not damage to other work or other property.