This summer, the Arizona Supreme Court rendered an opinion in Teufel v. American Family Ins. Co., et al., 244 Ariz. 383 (2018) that addresses interesting issues relating to insurance and the nature of the legal obligations owed by builder-vendors to home buyers. Specifically, the Court examined whether a homeowner’s insurance policy exclusion “for personal liability ‘under any contract or agreement’ relieve[d] an insurer of defending its insured, an alleged builder-vendor, against a claim for negligent excavation brought by the home buyer.” The Court ultimately held “that the exclusion did not apply to relieve the insure of its duty to defend because the negligence claim [arose] from the common law duty to construct the home as a reasonable builder would.”
The Arizona Court of Appeals recently issued an opinion in Double AA Builders, Ltd. v. Preferred Contractors Insurance Company, LLC., No. 1 CA-CV 15-0375, which addresses several key construction-related commercial general liability insurance policy (“CGL”) provisions. The court ultimately held that the subject CGL policy did not provide the general contractor (who was an additional insured) more and/or different coverage than the subcontractor (who was the named insured). As a result, the court found that the General Contractor was not insured for the loss at issue. But in reaching its decision, the court examined the concepts of “additional insureds,” ” your work exclusions,” and “subcontractor exceptions” in connection with CGL policies. For this reason, Double AA Builders is a particularly interesting case.