Federal Court Finds Term "Subcontractor" in Exception to "Your Work" Exclusion to Be Ambiguous

Mosser Construction, Inc. v. The Travelers Indemnity Co. (6th Cir. (Oh.), July 14, 2011)

A construction company that made improvements on a waste-water treatment facility sought coverage for a suit by a municipality after the walls of a new building began to crack, allegedly due to defective backfill material. The company contracted with another entity to provide the backfill material. Although the CGL insurance policy contained an exclusion for property damage to the company’s work, it excepted from the exclusion damaged work that was performed on the company’s behalf by “a subcontractor.” Noting that the term“subcontractor” was not defined in the policy and was ambiguous since it could be interpreted with different meanings, the federal appellate court held that it was unclear whether the term applied to a material provider where no on-site work or customization was performed. Accordingly, the policy was interpreted in favor of the company and the duty to defend was triggered.