According to the Louisiana Supreme Court, a commercial general liability policy unambiguously excluded coverage for a contractor’s faulty workmanship. Supreme Services & Specialty Co. Inc. v. Sonny Greer, 958 So.2d 634 (La. 2007). The homeowner instituted legal action claiming that cracks in the slab were the result of faulty and defective design and construction, alleging causes of action based on breach of contract and breach of warranty. Relying on the “work product” exclusion in the policy, the court recognized that it reflected the insurance company’s intent to “avoid the possibility that coverage under a CGL policy will be used to repair and replace the insured’s defective products and faulty workmanship.”
The court recognized that a commercial general liability policy “is not written to guarantee the quality of the insured’s work or product.” The court also found that the term “work” was defined as the contractor’s operations and “includes all the work associated with laying the concrete slab . . .” making it clear that damage to the product itself was excluded from coverage. Consequently, the court rejected claims that the insurance policy covered property that must be repaired or replaced because the work was incorrectly performed, eliminating any obligation to repair or replace the insured’s defective product.
The court further concluded that the work product exclusion and the products completed operations hazard are not inherently ambiguous. While the work product exclusion precludes coverage to the insured’s work or product caused by faulty workmanship, the products completed operations hazard provides coverage for damages other than the faulty product or work itself arising out of the faulty workmanship. In other words, the products completed operations provision applies to damages and injuries that might occur as a result of the damaged product.