I represented an owner who hired a contractor to build a large equestrian center. The roofing was put on upside down! The result was that water leaked into the building, soaking the insulation, which in turn fell on the floor in great sheets, damp, smelly and a general mess. The resulting litigation involved the owner, the contractor, the architect, the roofing sub-contractor, and the roofing material supplier. That’s another story.
The point here is that when a claim was made to the insurance carrier of the general contractor, who in turn made a claim to the insurance carrier of the roofing subcontractor for the roof which had to be redone, the carrier denied coverage, based on the “your work” exclusion. The carrier would cover the damage caused by the water leak but not the cost of redoing the roof. Why? Because the “your work” exclusion means that insurance coverage does not cover poor/improper/negligent work. Damages from the work-yes. The redo of the work, no. Contractors commonly think that if they have insurance, they are covered for everything. No. They are only covered for damage caused by their poor work. The solution to the owner is to require a performance bond. It is not a cure all, but it is better than trying to recover from a contractor who has nothing, or in this case, filed bankruptcy. The reason why the roof was put on upside down is another