More "Texas Justice" For Policyholder On Contractual Liability Exclusion

On October 29, the Fifth Circuit reversed itself for the second time this year in a case involving the interpretation of a contractual liability exclusion in a CGL policy. This recent decision by the Fifth Circuit in Crownover v. Mid-Continent Casualty Co., coupled with decisions from the Texas Supreme Court and Fifth Circuit earlier this year in Ewing Constr. Co. v. Amerisure Ins. Co., is of major significance to the construction industry in Texas. These decisions ensure that the valuable protection that contractors, builders, and their customers depend on from CGL policies is not swallowed up by an overly broad interpretation of a standard exclusion.

Many CGL policies exclude damages "for which the insured is obligated to pay by reason of the assumption of liability in a contract or agreement." This standard exclusion has a carve-out, however, for liability "[t]hat the insured would have in the absence of the contract or agreement."