Act’s Definition of “Occurence” Only Applies Prospectively

The South Carolina Supreme Court held unconstitutional the retroactivity clause in S.C. Code Ann. Section 38-61-70, which was made effective on May 17, 2011. The Act defines “occurrence” in a commercial general liability policy as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions and property damage or  bodily injury resulting from faulty workmanship, exclusive of the faulty workmanship itself.”

The Act’s retroactivity clause provides: “This section applies to any pending or future dispute over coverage that would otherwise be affected by this section as to all commercial general liability policies issued in the past, currently in existence, or issued in the future.”

The S.C. Supreme Court held that this clause unconstitutionally violates the Contract Clause of both the U.S. and S.C. Constitutions because retroactive application of this definition would substantially impair existing contractual relationships. The Court addressed whether the Act was reasonable and necessary to effectuate a legitimate legislative purpose and held that it was not.

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

 

 

Contractors: You Must Timely File Notice of Claims with Your CGL Carrier

Sheehan Constr. Co. v. Continental Casualty Co., 938 N.E. 2d 685 (Dec. 2010).

A contractor failed to provide its CGL insurance company with notice of claims against it for over two years.  The underlying claims were based on construction defects by the contractor’s subs.  The insurance company refused to tender coverage based on prejudice for the untimely notice.  The court sided with the carrier and held that although the underlying claims may have warranted coverage by the carrier, failure to provide timely notice was fatal to the contractor.  There was no need for the carrier to prove it was actually harmed because the contractor’s failure to notify allows the presumption of presumption of prejudice to arise in favor of the insurance company. That presumption then must be rebutted by the contractor (insured).  Because the contractor failed to set forth any evidence that its failure to provide notice did not prejudice the carrier, the court held that the denial of coverage was appropriate.

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice.  Seek a competent attorney for advice on any legal matter.

Posted in CGL