In this judgment, discussed in part 1 here the insurer in rejecting the claim argued that the insured property had to be altered, not merely defectively constructed, in order to constitute “physical loss” or “damage”. 

The insurer argued that the insured property was not altered because the honeycombed concrete components were defective from the time they were made.  The concrete components did not become defective.

The court rejected the argument on the basis that:

A change that results in the reduction of the weightbearing capacity of a bridge is an alteration to the bridge;

and the authorities cited by the insurers were not apposite and “while perhaps impressive in quantity, are wanting in relevance.”

The court distinguished between commercial general liability policies and a builder’s risk policy saying that the difference was critical.  General liability policies insure against the possibility that the goods, products and works of the insured once relinquished or completed will cause bodily injury or damage to property other than to the product or completed work itself.  The purpose of such policies is to provide coverage for injury or damage to persons or property of others.  They are not intended to pay the costs of repairing and replacing the insured’s defective work and products.

By contrast the policy under consideration undoubtedly provided coverage for damage to the bridge structures, whether permanent or temporary during construction, said the court.