Is faulty workmanship covered under your commercial general liability policy?

In the first part of this three-part series on commercial general liability, I discussed whether faulty workmanship alone can constitute an "occurrence" under a standard CGL policy. Assuming there has been an "occurrence," this article will discuss whether the "your work" exclusion bars coverage for a contractor's faulty workmanship.

Standard CGL policies typically exclude coverage for "property damage" to "your work" arising out of it or any part of it and included in the "products-completed operations hazard." This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on the contractor's behalf by a subcontractor. Accordingly, property damage to or caused by the contractor's own work is excluded, but property damage to or caused by a subcontractor's work is not excluded.

Prior to 1986, contractors had to purchase an endorsement to eliminate the exclusion for work performed by subcontractors. The ISO revised the CGL policy in 1986 because policyholders wanted coverage for defective construction as long as it was performed by a subcontractor rather than...