Articles Posted in Limits of Liability

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iStock-535399524-construction-300x200Last week, the Ohio Supreme Court unfortunately narrowed the scope of coverage for a subcontractor’s faulty workmanship. The court held in Ohio Northern University v. Charles Construction Services, Inc. that faulty workmanship in a construction defect case is not an “occurrence” under standard-form CGL policies in Ohio. The circumstances will sound familiar to anyone involved in the construction industry: Ohio Northern University retained Charles Construction to build a hotel and conference center on campus. The contract required Charles to maintain a CGL policy with Products-Completed Operations-Hazard coverage. Charles obtained a policy from Cincinnati Insurance Company with the required coverage.

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A critical component of any insurance policy is of course its limit, which is usually the most an insurance company must pay for a loss. But many property insurance policies include “sublimits” that provide a lower limit for particular losses.

iStock-535435283-sub-300x200Identifying the sublimits in a policy is usually straightforward since they typically appear in a list or chart in the policy’s declarations section. Sublimits generally fall into one of two types: (1) sublimits that apply to particular perils, like flood, Named Storm or earthquake; and (2) sublimits that apply to a type of damage or cost, like debris removal or preservation of property. There are many different perils and costs that a policy may sublimit, and sublimits appear in many types of policies (including, for example, sublimits for coverage for wage and hour claims under an employment liability policy). However, this blog will focus on property policy sublimits. Because many property policies include sublimits that apply to storm-related losses, they may particularly be an issue for companies damaged by hurricanes like 2017’s Harvey, Irma, Jose and Maria.

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