The Supreme Court in the state has also restricted the exclusions for general contractor coverage.
The Texas Supreme Court has given a new ruling that may help to increase the consumer confidence levels in terms of the liability insurance coverage that is carried by general contractors as well as builders.
The ruling will help to decrease the number of exclusions that exist on these policies.
This insurance news was made when Justice Phil Johnson made a ruling that denied the attempt of an insurer to avoid having to pay a claim. The justification given by the insurer was based on the language that is contained within the majority of commercial general liability insurance policies. The entire country had eyes on this Texas case and the other states were holding their breath to find out what would happen.
The reason is that decisions in Texas frequently influence liability insurance rulings in courts across the U.S.
This is the case for many kinds of rulings beyond this recent news, as well. Had the Supreme Court in Texas decided in favor of the insurer, then there would have been a near elimination of coverage for errors in construction within the state. That coverage that had previously been applied in policies for builders and general contractors would have nearly disappeared.
The problem is that the majority of general contractors don’t have the type of free cash to be able to over defects in construction. Therefore, they rely on their insurance coverage to be able to make sure that their customers are compensated for any mistakes that happen in construction. This ruling by the courts in Texas will help property owners to know that this coverage remains in place, so that they can continue to purchase homes and to hire contractors with confidence.
The issue at the center of this case is that majority of general liability insurance policies contain a clause that excludes liability claims when the builder or contractor has made an assumption of liability in an agreement or a contract. In these cases, insurers frequently require contractors to have to purchase another level of coverage when additional risk is assumed. One of the exceptions that exists within that clause is that the insurer must pay out on liability claims that occur when damage happens to property as a result of a general liability that would have been valid should the contract not have existed.