When a contractor makes a mistake on one part of a structure that causes damage to other parts they worked on, does their liability insurance cover all, some, or none of the resulting damage? A Texas court addressed that question in a 2009 decision that interpreted the Commercial General Liability policy’s “that particular part” clause, a phrase that has produced many differing court outcomes.
In the case, a contractor performed exterior water-sealing and retaining-wall work improperly, allowing large amounts of water to enter the condominium structure through multiple points. Water intrusion damaged other areas of the project on which the contractor had worked, including stud framing and interior drywall. The contractor notified its insurer, which denied coverage based on two policy exclusions.
The first exclusion barred coverage for “property damage to ... that particular part of real property on which (the insured contractor) or any contractors or subcontractors ... are performing operations, if the property damage arises out of those operations.” The insurer argued this exclusion removed coverage for property that was the subject of the contractor’s operations.
The court concluded the first exclusion did not apply because the contractor was not performing operations when the damage occurred; exterior work was complete and interior work had been suspended. The court read the exclusion as applying only while the insured is actively performing operations.
The second exclusion provided no coverage for “property damage to ... that particular part of any property that must be restored, repaired or replaced because (the contractor’s) work was incorrectly performed on it.” The insurer intended this exclusion to avoid covering the insured’s defective workmanship itself.
No coverage for damage to:
- Property;
- that must be restored, repaired or replaced;
- because the contractor performed work on it incorrectly.
The court parsed those components and concluded the exclusion applies only to parts of the property that were themselves the subjects of defective work. Because the owner did not claim the contractor performed faulty work on the interior components, the court held the exclusion did not bar coverage for interior damage that resulted from the exterior defects.
Case outcomes vary with policy language and the facts of each loss, so contractors and owners should review coverage carefully. For context about typical policy wording and construction exposures, see Insurance for Construction Projects.
If your work or project involves operations beyond your home state or involves other insureds, consider how different liability products respond to property damage and third‑party claims; a helpful starting point is Foreign Liability Insurance.
If you have questions about how a specific policy would respond to a similar claim, talk to an agent who can review the policy language and claims history with you.
Courts have interpreted “that particular part” exclusions in different ways depending on policy wording and the facts presented, so coverage for contractor-caused damage is not always clear-cut.
Frequently Asked Questions
Does general liability insurance cover damage caused by a contractor’s defective work?
It depends on the policy wording and the facts; many policies exclude coverage for damage that is the result of the insured’s own defective work, but they may cover resulting damage to other property in some circumstances.
What does the “that particular part” clause mean?
The clause is commonly interpreted to limit coverage for the portion of the property that must be repaired or replaced because of defective work, not necessarily for all resulting damage to other parts of the property.
Can an insurer deny a claim for damage to parts the contractor did not directly work on?
Yes or no, depending on the policy and the facts; some courts find exclusions apply only to the defective part itself, while others allow broader denials if the exclusion is written expansively.
What should a contractor do after discovering damage that may involve insurance?
Report the loss promptly, preserve evidence, and consult the policy and an agent to understand potential coverages and exclusions without delay.