Is There Insurance Coverage for Defective Construction?

September 2016

Fall 2016  
Is There Insurance Coverage for 
Defective Construction?

Published in California Lawyer

In many scenarios involving allegedly defective construction, the injured party —   be it a homeowner, a commercial project developer or a homeowners association  asks that the issue be turned over to the contractor’s insurance company.  While this sounds prudent, it is often a dead end because in most instances, contractors (and subcontractors as well) are not insured for defective construction per se.

In almost every case, they have purchased commercial general liability (CGL) insurance that requires an “occurrence” and “property damage” in order to trigger coverage. And sadly for the homeowner, project developer or HOA, defective construction by itself rarely constitutes either an “occurrence” or “property damage.”
Medicare Set-Aside Accounts for Future Medical Expenses in Personal Injury Claims

Published in Claims Journal

When a settlement is reached in a personal injury lawsuit, a written settlement agreement is prepared. If medical expenses for the injured party have been paid by Medicare, a Medicare Set-Aside Account (MSA) may be created to reimburse Medicare for past, and potentially future, medical payments. The purpose of a MSA is to ensure that Medicare will not pay bills for plaintiff’s injuries where there is other insurance available.

The rationale is that since plaintiffs receive settlement money from an insurance company to cover future medical expenses, Medicare wants to 
ensure that a portion of the settlement money is spent on injury-related care before the taxpayers start paying through Medicare.


Alert: Update Your Employment Manual

Published in the California Auto Dealer
If you  haven’t updated the employment policy manual recently, or even if you have, you may want to make sure your policy now includes harassment, discrimination and retaliation policies. Many dealers have updated only the discrimination policies, while the law requires an update to all three. 

The new regulations specifically provide provisions that have long been part of the law but must now be specifically stated in the employment policy manual. For example, the policy must now include a complaint procedure that does not require an employee to complain to his or her immediate supervisor. 

Although having a written complaint procedure has always been a good practice, and frankly necessary to properly defend against a claim of harassment, discrimination or retaliation, now the law specifically requires that such a policy be in writing and delivered to all employees.
Read California Auto Dealer here

Reasonable Expectations: Interpreting Insurance Policies in Common Law 
Now Available!

Gray Duffy,LLP and Partner Timothy Thornton, Jr. are pleased to announce the publication of Reasonable Expectations: Interpreting Insurance Policies in Common Law. Published by the ABA, in conjunction with the Tort Trial and Insurance Practice Section, this book is aimed to assist insurance lawyers and other professionals understand the doctrine of reasonable expectation with regard to insurance law.

Thornton served as co-editor of the 54-chapter guide for insurance law attorneys who face challenges interpreting state laws for various jurisdictions.
Firm Announcements
Congratulations to Timothy Thornton, Jr., who was named on the 2017 Best Lawyers in America© list for insurance law.
Gray·Duffy, LLP is pleased to announce the extension of Allyson Weldon’s internship through her third year of law school. Additionally, we have offered, and she has accepted, a position as a full-time associate in our Encino office upon her completion of law school and passing the bar.

Hear From Our Clients

“It was a pleasure working with Michael Eisenbaum throughout the legal process in our personal injury case. Gray·Duffy was dependable and we were more than satisfied with the results. I am happy to recommend the firm and am confident the attorneys at Gray·Duffy will do their best to succeed in any endeavor you present to them.”

Anthony Lappas, Client

*These endorsements do not constitute a guarantee, warranty or prediction regarding the outcome of your legal matter.

So You Think You Know 
The Law?

True or False?

Incorporation of an insured’s defective work into another’s building constitutes “property damage” that is always covered under a commercial general liability policy.



True or False?

Incorporation of defective work performed by an insured into another’s building that causes physical damage to other work or property is covered under a commercial general liability policy.

True or False?

Commercial general liability insurance policies provide a warranty that the insured’s work is not defective and will perform as warranted.

True or False?

Diminution in value of another’s structure or product because it incorporates the insured’s defective work or product constitutes property damage that is always covered under a commercial general liability policy.

Get the answers here.

Real Estate Corner

Cancelling a Real Estate Purchase Agreement by the Seller the Proper Way

Unless a real estate purchase agreement is properly cancelled, a seller may face legal action by the buyer for breach of contract, specific performance, and other remedies. 
The California Residential Purchase Agreement (RPA-CA) describes ten reasons why a seller may cancel. All of the reasons require some type of notice to be given to the buyer, either a Notice to Buyer to Perform (Form NBP) or a Demand to Close Escrow (Form DCE before a seller may issue a cancellation. A seller may cancel if the buyer, after being served with an NBP, fails to perform as required.


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Please Note: These articles are necessarily general in nature and do not substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.

Please Note: This article is necessarily general in nature and is not a substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.