General contractors are all too familiar with the limitations in
a CGL policy relating to defective work. Those limitations
exclude coverage for costs associated with damage caused by
"your work." There is a limited exception to the
"your work" exclusion in some CGL policies that affords
coverage for damage to other work caused by defective work
performed by subcontractors (the "Subcontractor
Exception"). Regardless, there is no coverage for the
costs of correcting the defective work itself – only for
damage to other work caused by the defective work.
Water intrusion situations provide good examples of how this
coverage works. A subcontractor's defective installation
of windows may result in water damage to carpet and drywall work
performed by other subcontractors. A general contractor's
CGL policy may cover the cost of repairing the carpet and drywall
under the Subcontractor Exception. However, the cost of
correcting the defective window installation is
