Vero’s exclusion clause in a construction-works insurance policy denying liability for defective workmanship did not exclude damage to window glass valued at $385,000 scratched by cleaners as part of a building site final cleanup, the High Court ruled.
Vero argued it was being forced to accept liability for the competence of on-site contractors.
The High Court was told subcontractors cleaning a new-build family home did not remove dust and grit from windows when undertaking the final clean. Scratched windows resulted. Vero refused to pay; the scratching was ‘a defect in workmanship’ it said, excluded by the policy.
What insurance contracts appear to cover are often taken away by exclusion clauses buried in the fine print. The courts look closely to see whether exclusion clause wording actually applies to the loss claimed. The homeowners said their scratched windows were not defective due to poor workmanship, they were damaged by poor workmanship. The Vero policy does not exclude damage caused by defective workmanship, they said. Justice Fitzgerald ruled Vero’s exclusion clause did not extend to property damage resulting directly from negligent work; it was liable to pay compensation for the damaged glass. Liability for the labour cost of replacing the windows is a separate issue. Wording of the disputed exclusion clause did exclude the cost of repairing or rectifying faulty work. Doing the job properly is required by the original construction contract.
Corbett v. Vero Insurance NZ ltd – High Court (30.07.9)
19.140