A contractor receives a complaint filed with LARA regarding defective work. The contractor has insurance coverage of $500,000 general liability and $100,000 professional liability. The claim is for $75,000 in damages. Which insurance policy would primarily respond to this claim?
Correct Answer
D) General liability only
Defective workmanship claims are typically covered under general liability insurance, which covers bodily injury and property damage caused by the contractor's operations.
Why This Is the Correct Answer
Defective workmanship claims — where a contractor's physical construction work causes property damage — are covered under general liability insurance. General liability covers bodily injury and property damage arising from the contractor's operations and completed work. The $75,000 claim falls well within the $500,000 general liability limit, making it the primary responding policy.
Why the Other Options Are Wrong
Option A: Professional liability only
Professional liability (errors & omissions) covers claims arising from professional design errors, negligent advice, or failure to meet professional standards — not physical construction defects. A contractor who installs something incorrectly is making a workmanship error, not a professional design error. Professional liability is not the primary policy here.
Option B: Both policies equally
Both policies do not respond equally to a defective workmanship claim. The two coverages have distinct triggers: general liability responds to physical damage from operations; professional liability responds to design/advice errors. These don't overlap for a standard defective work claim — general liability handles it alone.
Option C: Neither policy covers this type of claim
Stating that neither policy covers defective workmanship is incorrect. General liability is specifically designed to cover property damage caused by the contractor's work, including completed operations. The claim is well within policy limits and falls squarely within coverage.
Memory Technique
General Liability = 'What you BUILD.' Professional Liability = 'What you DESIGN or ADVISE.' A leaky roof caused by improper installation is a GL claim. A leaky roof caused by a flawed architectural specification is a PL claim. Contractors building things → GL. Professionals giving advice → PL.
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