Cases—Interpretation—”faulty workmanship”

An insured homeowner’s “all risks” policy did not cover losses caused by “brown rot” in the lumber used in building an addition, or incompetent workmanship by the contractor, according to a federal district court in California.

Back in 1980, the homeowners had an addition put on their house.  During remodeling in 2002 it was discovered that the remodeler’s workmanship had been defective and the wood was rotten.  The owners claimed that they were injured by a failure to warn that the wood might have rot.  The policy, however, excluded “loss caused directly or indirectly by . . . faulty, inadequate, or defective . . . workmanship, repair, construction, renovation, [or] remodeling . . . [or by] materials used in repair, construction, renovation or remodeling.”  Thus, said the court, the loss was squarely within the policy exclusion.

Sapiro v. Encompass Insurance., 2004 U.S. Dist. LEXIS 22054 (N.D. Cal. Nov. 2, 2004).