On June 29, 2020, the Michigan Supreme Court issued a unanimous opinion in a case with wide ranging implications for all contractors in Michigan who purchase CGL insurance. In a break from over thirty years of established law, the Court held that there “may” be coverage for a contractor’s own faulty work as long as the it was an unanticipated accident.
In Skanska USA Building v MAP Mechanical Contractors, Inc., Skanska served as the construction manager and contracted with MAP to install a steam boiler for the Mid-Michigan Medical Center. MAP accidentally installed some of the expansion joints backwards which lead to over $1 million in damage to concrete, steel, and the heating system. Skanska paid for these repairs and sued Amerisure Insurance Company under a CGL policy seeking recovery. Consistent with prior law, Skanska’s claims against the insurance company were rejected, however, the case eventually reached the Michigan Supreme Court.
Hilger Hammond was pleased to file an amici curiae brief on behalf of Associated Builders and Contractors of Michigan and multiple chapters arguing in favor of insurance coverage for contractors. The firm was pleased that the court agreed with the positions concerning insurance coverage in today’s ruling. Essentially, the court held that a case called Hawkeye, no longer held precedential value in deciding coverage cases. This was monumental as insurers and lower courts have relied on Hawkeye for over 30 years to deny insurance claims of contractors seeking coverage for their own faulty work.
The Skanska case is not technically over as it was sent back down to the Court of Appeals. However, the impact of this ruling cannot be overstated. If you face a claim on a project and you had CGL coverage there is a chance insurance could pay for the loss – even if the loss is only to your own work. Each situation is different, so be sure to consult your legal professional to determine your rights under this new legal development.