Board-Certified In Construction Law By The Florida Bar

No Protection From Others for Your Breaches of Contract


By: Robert S. Tanner, Esq.

About the Author: Larry Leiby, Esq. was the founder and first chairman of the Florida Bar Construction Law Committee in 1976. He is the author of the Florida Construction Law Manual. He is Board Certified in Construction Law and was on the Construction Law Certification Committee that creates and grades the tests for construction law board certification. He was awarded the lifetime achievement award by the Florida Bar Construction Law Committee and teaches construction law at the Florida International University College of Law. He can be reached at [email protected]. For more information, please visit

If your work needs to be re-done just because it was not done properly in the first place (as opposed to being redone because, for example, another trade damaged it), your commercial general liability carrier will likely be of little help.

In Precise Construction, Inc. v. Amerisure Insurance Co., Case No. 10-10976 (11 th Cir. March 14, 2011), Precise Construction, Inc. was the general contractor (“Contractor”) on a project to build twin medical buildings. Contractor had a subcontract with GBL Group, Inc. (“Subcontractor”) to construct the foundations for the buildings. Due to Contractor’s placement error, Subcontractor laid the foundations eight feet from where they were supposed to be, which created problems with the site plan, right-of-ways and setbacks, parking, sidewalks, utilities, and retention. As a result of Contractor’s error. the foundations had to be demolished and rebuilt in the correct locations. The mistake did not cause damage to any “other property.” That is, the work itself was the only damage.

Subcontractor was covered by a commercial general liability (“CGL”) policy issued by Amerisure Insurance Company (“Amerisure”). Contractor was named as an additional insured on the policy. It appears that Contractor and its surety asserted a claim against Amerisure for the cost of demolishing the foundations and re-constructing them in their correct locations. The trial court granted summary judgment in favor of Amerisure. Contractor and its surety appealed.

Based on the fact that there was no damage to property other than Subcontractor’s work, the appellate court applied the well-established rule that “property damage under a commercial general liability policy does not include the costs associated with removing and replacing defective work” itself. Stated another way, an insured’s general liability policy does not provide protection when the only “damage” is that the insured’s work was done improperly.

Generally speaking, as a matter of law, general liability insurance cannot be used to protect one against its own contractual breaches. Likewise, a performance bond is unlikely to be of any help either. Although at first glance it might appear that performance bonds provide protection for a breach of contract, it is not the person who tenders the defective performance who will be protected because usually that person puts up a personal guarantee to secure the bond. So, one who buys a CGL insurers or a performance bond should not expect to be relieved of liability for failing to properly perform his work. It is essential that you understand these potential risks when bidding to perform a job and in deciding what insurance or guarantees to require of your subcontractors. The attorneys at Malka & Kravitz, P.A. can of course assist you in all such matters.