How far does it go?

CGL insurance coverage sometimes extends to subcontractors

This is the third in a series of articles addressing commercial general liability insurance. The first article, published in the October 2008 issue, addresses whether claims alleged as a breach of contract are potentially covered by insurance. The second article, published in the December 2008 issue, discusses what constitutes an occurrence and whether claims alleging defective workmanship meet the occurrence requirement. Also, though it is Professional Roofing's policy to provide location information for companies mentioned in articles, some information is missing from this article because the companies in question no longer are in business.

Let's say a roofing contractor signs a contract to install a large roof system on a high-end shopping center in south Florida. A vast majority of the job consists of a low-slope membrane roof system, but there are certain areas where tile is to be installed. The roofing contractor hires a subcontractor to install the tile roof system.

Following construction, the tile roof system leaks. Efforts to stop the leaks are unsuccessful. The leaks damage tenants' inventory, and one tenant withholds rent, claiming he cannot use a portion of his leased space because of the risk of roof leaks.

The owner hires a roof consultant to investigate. The consultant concludes the leaks are a result of the subcontractor's use of the wrong type of tile and defective installation. To stop the leaks, the consultant recommends the tile roof system's removal and replacement. Meanwhile, the subcontractor has gone out of business.