On May 12, 2020, the United States Eight Circuit Court of Appeals, applying Missouri law, rejected a contractor’s contention that its commercial general liability (CGL) policy provided coverage for claims arising out of the contractor’s allegedly defective construction work. See Am. Family Mut. Ins. Co., S.I. v. Mid-Am. Grain Distributors, LLC, No. 19-2050, 2020 WL 2373986 (8th Cir. May 12, 2020). The court’s decision affirmed the lower court’s summary judgment decision in favor of the insurer.

Contractor Mid-American Grain Distributors, LLC (“Mid-American”) sought a defense and indemnification under its CGL policy issued by American Family Mutual Insurance Company (the “Insurer”) in response to claims in a lawsuit alleging damages arising from “design and construction issues.” However, the CGL policy only provided coverage for an occurrence, which was defined as an accident under the policy. Under Missouri law, an accident is determined by examining whether “the insured foresaw or expected the injury or damages” and does not include “acts that result in expected or foreseeable damages.”

Reasoning that damages resulting from shoddy workmanship are foreseeable, the appellate court ruled that there was no “accident” to trigger a defense or indemnification for Mid-American. This case serves as a reminder to owners and contractors alike that a contractor’s insurance policy often does not provide coverage for damages resulting from the contractor’s defective or shoddy work.