## Facts

- A general contractor built multiple homes in Lee County, Florida, using subcontractors for site preparation, including soil selection, compaction, and testing.
- After completion and delivery, the homes developed structural damage to foundations, drywall, and interior components.
- The parties did not dispute that subcontractors’ deficient soil work caused the damage.
- Homeowners asserted claims including breach of contract, breach of warranty, negligence, strict liability, and building code violations, and demanded repairs.
- The contractor was insured under post-1986 standard-form commercial general liability (CGL) policies that included products-completed operations hazard coverage.
- The policies contained a “your work” exclusion with an exception when the work was performed by a subcontractor on the insured’s behalf.
- The insurer denied coverage for the cost to repair damage to the homes themselves, conceding only limited coverage (e.g., personal property damage).
- The contractor repaired the homes and sought declaratory relief establishing coverage.

## Issues

1. Whether, under a post-1986 standard CGL policy issued to a general contractor, subcontractor defective workmanship that causes damage to the completed project can be an “occurrence” (i.e., an accident) from the contractor’s standpoint.
2. Whether physical damage to the completed homes caused by subcontractor defective work qualifies as covered “property damage,” and whether the “your work” exclusion bars coverage despite the subcontractor exception.

## Decision

- The Florida Supreme Court approved the appellate decision finding coverage and disapproved a conflicting district court decision that had denied such coverage under earlier policy language.
- The court held that defective work performed by a subcontractor that causes unexpected and unintended damage to the contractor’s completed project can constitute “property damage” caused by an “occurrence.”
- The court further held that such claims are covered under a post-1986 CGL policy unless a specific exclusion applies to bar coverage.
- Because the policies’ “your work” exclusion contained a subcontractor exception, that exclusion did not bar coverage for damage arising from subcontractor work on the completed homes.

## Legal Principles

- Under a post-1986 standard-form CGL policy, subcontractor faulty workmanship may constitute an “occurrence” when it results in damage that is neither expected nor intended from the general contractor’s standpoint.
- “Property damage” includes physical injury to tangible property within the completed project; it is not limited to damage to property other than the insured’s work.
- The post-1986 subcontractor exception to the “your work” exclusion reflects that the exclusion does not eliminate coverage for damage to completed work arising out of subcontractor-performed work, absent another applicable exclusion.
- General statements that CGL insurance is not a performance bond do not override policy language that extends coverage for accidental, subcontractor-caused damage to completed operations.

## Conclusion

The court held that, under post-1986 CGL policies with products-completed operations hazard coverage and a subcontractor exception to the “your work” exclusion, unintentional subcontractor-caused physical damage to a completed home can be covered property damage caused by an occurrence, unless another exclusion applies.


United States Fire Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871 (Fla. 2007)