ENSUING LOSS CLAUSE

Bob Robison Com. Flooring Inc. v. RLI Ins. Co., 2025 U.S. App. LEXIS 6369 (8th Cir., Mar. 19, 2025)
Eighth Circuit, predicting Arkansas law, concludes that an ensuing loss exception to a “Defects, Errors, Or Omissions” exclusion* in a builder’s risk policy installation floater did not “restore” coverage for costs incurred by a contractor-insured to remove and replace flooring it installed in a gym that was damaged by a subcontractor’s faulty painting work. It was undisputed that faulty workmanship was the sole and exclusive cause of loss which occurred when paint was misapplied to the floor. The insured argued the ensuing loss clause restored coverage because the damage to the floor was a covered peril that resulted from the sub’s work and the language defining “covered peril” rendered the clause “nonsensical and its coverage illusory.”

Reprinted courtesy of John S. Anooshian, White and Williams LLP, Paul A. Briganti, White and Williams LLP, Gianna Martorano, White and Williams LLP, Tracey M. Jervis, White and Williams LLP, Ingrid Lopez Martinez, White and Williams LLP and Austin D. Moody, White and Williams LLP

Mr. Anooshian may be contacted at anooshianj@whiteandwilliams.com
Mr. Briganti may be contacted at brigantip@whiteandwilliams.com
Ms. Martorano may be contacted at martoranog@whiteandwilliams.com
Mr. Moody may be contacted at moodya@whiteandwilliams.com