Homeowners, HOAs Likely to Benefit From Ruling, Lawyers Say

August 11th, 2016 by

New Jersey homeowners and community associations will likely benefit from a recent state Supreme Court ruling that said insurance carriers may be required to provide coverage for property damage caused by faulty workmanship on the part of subcontractors.

In a unanimous ruling of interest to homeowners released on Aug. 4, the court said standard insurance policies issued to general contractors and developers no longer contain language that allows for an exemption for coverage for damages caused by subcontractors.

The damage caused by a subcontractors’ faulty workmanship is ‘property damage’ and damage or an ‘occurence’ under the language of the commercial general liability policies.

In this case, the court ruled that two commercial general liability, or CGL, carriers must provide coverage to the developer and general contractors of Cypress Point condominiums. Cypress Point a 53-unit project in Hoboken, where residents alleged in a lawsuit that their units sustained water damage. The water damage was allegedly caused by faulty construction work on the part of subcontractors hired by the developers and general contractors—Adria Towers, Metro Homes and Commerce Construction Management Co.

A trial judge, relying on prior case law, had dismissed the claims, ruling that damages caused by subcontractors during construction were not an “occurrence.” An Appellate Division panel, in a reported decision, reversed, citing language changes made in standard CGL policies.

“This is a significant ruling for every condominium association and homeowner whose property has been damaged by subcontractors during construction,” said Cypress Point’s attorney, Mark Wiechnik.

“The owners’ only real means of recovery is through these CGL policies,” said Wiechnik, of Ansell Grimm & Aaron in Ocean.

Matthew Meyers, a litigator who focuses his practice on residential construction litigation, agreed.

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