Fourth Circuit Rejects Coverage for Construction Delay Damages
Congratulations to Agelo L. Reppas and Justin K. Seigler achieved a victory in Schnabel Foundation Co. v. National Union Fire Ins. Co. of Pittsburgh, PA, a coverage action pending in the Fourth Circuit Court of Appeals.
The insured was a construction subcontractor whose faulty excavation work caused soil to shift, resulting in county authorities issuing a stop-work order. The project delays caused other contractors at the site to sue Schnabel for significant delay damages.
Schnabel’s insurer, National Union, argued, and the Court of Appeals agreed, that the “impaired property or property not physically injured” exclusion precluded coverage because the delay damages resulted directly from the insured’s faulty work and failure to perform its contract, and because the worksite was fully restored to use solely by the correction of that faulty work, without the need to repair any other physical damage to the site.