For decades, courts applying Pennsylvania law have held that faulty workmanship claims in commercial general liability (“CGL”) policies do not constitute an “occurrence,” while also concluding that weather-related damages stemming from faulty workmanship also fail to meet the definition of “occurrence.” The well-known, oft-cited, case law supporting these conclusions includes Kvaerner v. Commercial Union Ins. Co. (“Kvaerner”) and Millers Capital v. Gambone (“Gambone”). These cases, though, deal with CGL policies, not homeowners policies. (“[N]atural and foreseeable acts, such as rainfall, which tend to exacerbate the damage, effect, or consequences caused ab initio by faulty workmanship also cannot be considered sufficiently fortuitous to constitute an ‘occurrence’ or ‘accident’ for the purposes of an occurrence based CGL policy.”)
Homeowners’ policies typically exclude faulty workmanship. Such exclusions typically contain an exception for covered ensuing losses. So, what constitutes a covered ensuing loss in Pennsylvania?
At least one Pennsylvania court has applied the so-called “foreseeability test” to a first-party property claim, barring coverage for ensuing damage stemming from faulty workmanship. Ridgewood Grp., LLC v. Millers Capital Ins. Co. (Pa. Super. 2017). Another federal court has followed the Ridgewood court, also barring coverage, i.e. Burgunder v. United Specialty Ins. Co. (W.D. Pa. 2018). Conversely, two (2) federal courts, applying Pennsylvania law, refused to follow Ridgewood: Griggs Rd., L.P. v. Selective Way Ins. Co. of Am. (M.D. Pa. 2019) and Buinewicz v. Nationwide Mut. Fire Ins. Co. (E.D. Pa. 2023).
The issue warrants continued, careful consideration by first-party property insurers. Application of the “foreseeability test” to property claims (first party) – considered a viable approach to coverage by some courts – has been rejected by others. Until an appellate court publishes a decision, or our Supreme Court weighs in with precedential guidance, we anticipate continued differences of opinion as to the application of the law to these claims.