OREGON SUPREME COURT BARS INSURER FROM LITIGATING COVERAGE ISSUES IN SUBSEQUENT LAWSUIT FOLLOWING VERDICT IN UNDERLYING CONSTRUCTION DEFECT LAWSUIT

Quarterly Newsletter Fall 2016

Standard CGL policies limit coverage for only covered “property damage” as defined by the policy. For policies issued to contractors, however, it is not always clear whether the alleged damage constitutes covered “property damage,” or whether such damages were caused by an “occurrence” during the policy period. Oftentimes, the jury in the underlying construction defect lawsuit is not asked to decide such questions, so it is left open for subsequent coverage litigation to resolve. However, the Oregon Supreme Court recently upheld a lower court ruling that barred an insurer from subsequently litigating the issue of which portion, if any, of the jury’s award against a subcontractor constituted covered versus uncovered “property damage.”

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