* Damage amounts:
– Electrical work $ 20,000
– Rest of house $230,000
– Contents $125,000
– Bodily Injury $500,000
* If electrical sub carries his own General Liability policy at time of fire and if builder’s
General Liability policy has Exclusion CG2294:
– sub’s policy will pay all damages except for $20,000
– builder’s policy will not pay the remaining $20,000 due to CG2294
* If electrical sub does not carry policy at time of fire because he went out of business and
if builder’s policy has Exclusion CG2294:
– Builder’s policy will cover $625,000
– Builder will be out of pocket $250,000 due to CG2294
The best way to illustrate the extent of the risk to a builder is to look at an example where a sub installs faulty electrical wiring which later results in a fire that destroys the entire house and injures its occupants. Assume that the damages to the electrical wiring installed by the sub are $20,000, the damages to the rest of the house are $230,000, the damages to the contents are $125,000, and the injuries to the occupants will result in damages of $500,000.
Under this example, assuming that the electrical sub carries his own General Liability policy at the time of the fire, his policy will pay for all damages except for the $20,000 damages to the electrical work that he installed. Remember, his own policy has a property damage to his work exclusion that will preclude coverage for damage to his own work. If the builder has exclusion CG2294 on his policy, such policy will not cover the remaining $20,000 of damages for the electrical work. As a result, both the electrical sub and/or builder will share out of pocket liability of $20,000.
Now assume that at the time of the fire, the electrical sub does not carry a General Liability policy because he went out of business shortly after the house was completed. If exclusion CG2294 is on the builder’s policy, the builder will have coverage for the damages attributable to both the contents and bodily injury to the occupants, but he won’t have any coverage for property damage to the faulty electrical work or for the resulting damages to the rest of the house. This amounts to $250,000 of out of pocket exposure.