The South Carolina Legislature is a recent example of several State Legislatures which have intervened to alter the standard "Occurrence" Definition in Commercial (aka Comprehensive) General Liability Insurance Policies. As reported by the South Carolina Supreme Court last November, the South Carolina Legislature mandated that an "Occurrence" for a CGL Policy shall include an additional Definition which is clearly intended to provide CGL Coverage for damage resulting from faulty workmanship:
On January 26, 2011, the General Assembly introduced Senate Bill 431, which was subsequently passed as Act No. 26 of the South Carolina Acts and Joint Resolutions and ratified on May 17, 2011 upon the Governor's signature. Act No. 26 was codified as section 38–61–70 of the South Carolina Code and provides in relevant parts:
(B) Commercial general liability insurance policies shall contain or be deemed to contain a definition of “occurrence” that includes:
(1) an accident, including continuous or repeated exposure to substantially the same general harmful conditions; and
(2) property damage or bodily injury resulting from faulty workmanship, exclusive of the faulty workmanship itself.
Harleysville Mutual Insurance Co. v. State of South Carolina, 2012 WL 570799 *1-*2 (S.C. November 21, 2012). The Supreme Court held that this South Carolina Statute could be applied prospectively, i.e., to future insurance contracts, but that the South Carolina Legislature's attempt to apply this provision retroactively ran afoul of the State Constitution's guarantee that existing contracts would not be impaired. Harleysville Mutual Insurance Co. v. State of South Carolina, 2012 WL 570799 *6 (S.C. November 21, 2012). Parenthetically, although the South Carolina Supreme Court also announced that retroactive application of this statute would also violate the United States Constitution, its analysis in support consisted of one "See also" citation to the U.S. Constitution.
Hawaii has enacted a similar statutory addition to the CGL "Occurrence" Definition, but in Hawaii the statute is not made retroactive. See Tred Eyerly, "Legislation Expanding 'Occurrence' to Cover Faulty Workmanship Cannot Be Applied Retroactively" posted December 19, 2012.
Before concluding what now constitutes a CGL "Occurrence" in a given jurisdiction, it is important to know that State Statutes may affect the outcome.
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