Construction Defect Coverage in Hawaii - A Window into the Nationwide Debate

The article discusses recent developments in Hawaii regarding insurance coverage for construction defect claims. The article then compares the treatment of construction defect claims by Hawaii courts with decisions issued by other courts across the country.A Commercial General Liability (“CGL”) policy covers potential liability for property damage caused by an “occurrence,” typically defined as an “accident,” including gradual, accidental harm. For years, a debate has raged on whether a CGL policy provides coverage for construction defects. Some courts have determined that a construction defect is not an “occurrence” and therefore not covered under a CGL policy. Instead, these courts hold that property damage caused by faulty workmanship arises from an expected or intended act or from breach of contract, which are non-fortuitous events and not covered by the policy.