Bill > A3401

Introduced Session

This bill requires commercial liability insurance policies to contain a definition of "occurrence" in order to provide more certainty with respect to coverage for faulty workmanship. This bill provides that a commercial liability insurance policy shall not be delivered, issued, executed, or renewed in this State, on or after the bill's effective date, unless the policy contains a definition of occurrence that includes: (1) an accident, including continuous or repeated exposure to substantially the same general harmful conditions; and (2) property damage or bodily injury resulting from faulty workmanship. Construction contracts typically require that the general contractor and any subcontractors performing work on a project secure commercial liability insurance that includes coverage for both property damage and bodily injury caused by an occurrence. Notwithstanding that this coverage is most often written on standard form insurance policies, courts have varied in their holdings as to whether damage from faulty workmanship is accidental in nature and therefore within the definition of an occurrence, for which coverage is provided. See, for example, Weedo v. Stone-E-Brick, 81 N.J. 233 (1979), Fireman's Ins. Co. of Newark v. National Union Fire Ins. Co., 387 N.J.Super. 434 (App. Div. 2006), Pennsylvania National Mutual Cas. Ins. Co. v. Parkshore Dev. Corp., 403 Fed. Appx. 770 (3rd Cir. 2010), and Greystone Construction v. National Fire & Marine Insurance Company, 661 F.3d 1272 (10th Cir. 2011). By providing a definition of occurrence that addresses both accidents and faulty workmanship, the bill is intended to reduce confusion in industry practices by resolving coverage issues arising from the holdings in various court decisions. The bill also provides that it is not intended to restrict or limit the nature or types of exclusions from coverage that an insurer includes in a commercial liability insurance policy.

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Gary Schaer (D)*, 

Introduced, Referred to Assembly Financial Institutions and Insurance Committee (on 02/25/2020)