By Jeffrey T. Donner, Esq.

September 8, 2026

A construction defect can present two separate legal problems. The first is whether a contractor, subcontractor, or other participant is responsible for the defective work and the resulting loss. The second is whether an insurance policy covers any portion of that responsibility.

Those questions require different analyses. Proof that a contractor breached its agreement does not, by itself, establish insurance coverage. Conversely, describing a dispute as a breach-of-contract case does not necessarily place it outside a commercial general liability policy.

For property owners, condominium associations, developers, and contractors, that distinction can have substantial financial consequences. A construction claim may involve extensive physical damage, multiple trades, successive insurance policies, and a repair plan that combines correction of the original defect with restoration of damaged property. Presenting all of those expenses as a single demand to “fix the construction” may obscure the facts that matter most to coverage.

Florida’s foundational decision addressing this problem is United States Fire Insurance Co. v. J.S.U.B., Inc., 979 So. 2d 871 (Fla. 2007). Its significance extends beyond the proposition that some construction losses may be insured. The decision provides a method for analyzing the policy and distinguishing defective performance from the physical damage that defective performance causes. Subsequent decisions demonstrate both the value of that framework and the consequences of failing to develop the evidence it requires. Read the Florida Supreme Court’s opinion in J.S.U.B.

The fundamental distinction: defective work and damage caused by defective work

A contractor may install the wrong material, omit a required component, or perform work that fails to satisfy the plans. Correcting that deficiency may be expensive. Expense alone, however, does not establish the “property damage” necessary for coverage under the policy language examined in J.S.U.B.

The analysis changes when defective work physically damages otherwise nondefective property.

Consider two hypothetical claims. In the first, a building component does not meet the contract specifications, but it has caused no additional physical damage. The owner wants the component replaced with what the contract required. In the second, an improperly installed component allows water to enter the building and damage framing, interior finishes, and other property. Although both disputes arise from defective construction, the second presents a distinct claim for resulting physical injury.

The Florida Supreme Court addressed this distinction directly:

“[T]here is a difference between a claim for the costs of repairing or removing defective work, which is not a claim for ‘property damage,’ and a claim for the costs of repairing damage caused by the defective work, which is a claim for ‘property damage.’”

J.S.U.B., 979 So. 2d at 889.

That distinction should guide the investigation from the beginning. A useful analysis identifies the original deficiency, the physical consequences of that deficiency, and the relationship between each proposed repair and the damage being repaired.

What J.S.U.B. actually decided

The contractors in J.S.U.B. built homes in southwest Florida. After the homes were completed and delivered, damage appeared in their foundations, drywall, and other interior areas. The damage resulted from subcontractors’ use of unsuitable soil and improper soil compaction and testing.

The insurer accepted coverage for certain damage to the homeowners’ personal property but disputed coverage for structural damage to the homes themselves. Its position would have treated damage to the contractor’s completed project differently from damage to property outside that project.

The Florida Supreme Court rejected that categorical distinction.

Under the policy language before it, subcontractor work that was neither intended nor expected to be defective from the contractor’s standpoint could constitute an “occurrence.” Physical injury to the completed homes resulting from that work could constitute “property damage.” The Court held that the structural-damage claim was covered because no applicable exclusion barred coverage.

The homes’ inclusion within the general contractor’s overall undertaking did not resolve the issue against coverage. The Court expressly rejected the contention that a defect rendered the entire project damaged from its inception, thereby preventing subsequent injury to the project from qualifying as property damage. Id. at 888–91.

This aspect of J.S.U.B. is especially important in substantial construction disputes. A building may constitute one completed project for contractual purposes while containing distinct work, materials, and systems relevant to the insurance analysis. Calling everything “the contractor’s work” does not answer whether one defect caused physical injury to otherwise nondefective portions of that project.

Why the policy’s history matters—and why broad slogans can mislead

Construction coverage disputes frequently invoke the proposition that liability insurance is not a performance bond. That proposition describes a real distinction, but it cannot substitute for examining the insurance contract.

In J.S.U.B., the Florida Supreme Court considered the evolution of standard commercial general liability forms. Earlier policy language broadly excluded damage to work performed by or on behalf of the insured. Later forms incorporated protection associated with subcontractor-caused damage, including an express subcontractor exception to the “your work” exclusion.

That evolution explained why the Court’s earlier decision in LaMarche v. Shelby Mutual Insurance Co., 390 So. 2d 325 (Fla. 1980), did not control the outcome. J.S.U.B. distinguished LaMarche without receding from it: the earlier case concerned different policy language and the repair or replacement of the contractor’s own defective work. J.S.U.B., 979 So. 2d at 891.

The distinction is more precise than saying that one case favors insurers and the other favors policyholders. Insurance language changed, and the legal analysis had to account for those changes.

A performance bond and a liability policy also serve different purposes. Recognizing coverage for physical damage caused by defective construction does not require the liability insurer to guarantee completion of every contractual obligation. An occurrence must still cause qualifying damage, and the policy’s exclusions and conditions remain relevant.

The practical lesson is straightforward: neither a broad statement about “business risks” nor a broad statement about “subcontractor coverage” resolves a particular claim. The language actually purchased must govern.

An “occurrence” is only the beginning of the analysis

One argument rejected in J.S.U.B. was that defective workmanship could never be accidental because its consequences were foreseeable.

The Court distinguished that reasoning from the policy inquiry. Work is ordinarily performed intentionally; a contractor intends to build the structure. It does not follow that the contractor intends or expects the resulting damage. Under the language considered in J.S.U.B., faulty workmanship that was neither intended nor expected from the contractor’s standpoint could constitute an accident and therefore an occurrence. Id. at 883–88.

But establishing an occurrence does not finish the coverage analysis.

The claimant must still identify damage within the policy’s coverage grant. Relevant questions include whether there was physical injury to tangible property, whether that injury occurred during the applicable policy period, and whether an exclusion removes coverage.

These are distinct inquiries. An event may qualify as an occurrence while the claimed expense remains merely the cost of correcting defective performance. Alternatively, resulting physical damage may satisfy the initial coverage language but fall within a specific exclusion.

Keeping these questions separate prevents a common analytical error: treating a favorable answer on one policy term as a favorable answer on the entire policy.

The “your work” exclusion must be read together with its exception

The policies in J.S.U.B. excluded certain property damage to the insured’s work arising out of that work and included within the products-completed operations hazard. But the exclusion contained an express limitation:

“This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.”

Id. at 876.

The wording matters in several respects.

First, the provision identifies both the damaged work and the work from which the damage arises. An analysis confined to who performed the allegedly defective operation may overlook the provision’s separate reference to who performed the damaged work.

Second, the exception addresses a particular exclusion. It does not independently establish an occurrence, create property damage, or eliminate unrelated exclusions.

Third, the exception must actually appear in the policy as issued. J.S.U.B. itself recognized that insurers could change the coverage bargain by eliminating the subcontractor exception or adding other exclusionary language. Id. at 891.

A complete policy review therefore requires more than the declarations page or a certificate showing that the contractor maintained liability insurance. The policy forms, definitions, endorsements, and applicable policy periods must be examined together.

The inquiry also must distinguish the general contractor’s insurance from a subcontractor’s insurance. The same physical loss may present different questions under policies issued to different insureds, particularly because the meaning of “your work” depends on whose policy is being analyzed.

Pozzi Window: precision about the damaged component

The Florida Supreme Court applied J.S.U.B. in Auto-Owners Insurance Co. v. Pozzi Window Co., 984 So. 2d 1241 (Fla. 2008).

The dispute involved custom windows purchased separately by the homeowner and installed by a subcontractor. The Court identified an unresolved factual distinction: were the windows themselves defective before installation, or were otherwise nondefective windows physically damaged by defective installation?

Those were different coverage scenarios. If the windows were initially sound and the installation damaged them, the claim could involve physical injury to tangible property. If the claim merely sought replacement of windows that were already defective, the analysis differed. The Court returned the matter to the Eleventh Circuit because that factual issue was determinative. Id. at 1247–49. Read Pozzi Window.

The lesson for investigating a claim is that “defective windows” and “defectively installed windows” should not be used interchangeably. The condition of the component before installation, the installation process, and the physical injury allegedly resulting from that process deserve separate attention.

Auchter: the limits of subdividing defective work

The Eleventh Circuit adopted a restrictive application of these principles in Amerisure Mutual Insurance Co. v. Auchter Co., 673 F.3d 1294 (11th Cir. 2012).

A subcontractor’s defective installation of roof tiles led to tile displacement and damage and required reconstruction of the roof. The majority treated the relevant defective component as the roof as a whole. Because the claim involved the defective roof without damage to another component of the inn, the court found no covered property damage. Id. at 1306–10.

Judge Carnes dissented, reasoning that the damage to initially nondefective tiles should fall within Pozzi Window. The majority nevertheless controlled the result. Read the Auchter opinion and dissent.

This disagreement illustrates why identifying the relevant component can be consequential. A party cannot assume that dividing a defective assembly into smaller pieces necessarily establishes damage beyond the defective work.

It also illustrates the need to distinguish Florida Supreme Court holdings from federal appellate interpretations of Florida law. A sound argument should identify the governing court and confront the applicable majority decisions, even when a dissent supplies a persuasive competing analysis.

Carithers: necessary reconstruction and the burden of proof

Carithers v. Mid-Continent Casualty Co., 782 F.3d 1240 (11th Cir. 2015), demonstrates both the availability and the limits of recovery.

The court allowed balcony-rebuilding costs because rebuilding was necessary to repair covered damage to the garage. That factual finding was not challenged as clearly erroneous. The decision did not establish general coverage for correcting every defect associated with covered damage.

The court also reversed awards involving brick and tile because the claimants failed to establish the subcontractor distinctions necessary under its application of Auchter.

On timing, the court applied an injury-in-fact trigger where the evidence established when damage occurred, expressly reserving situations in which that timing could not be determined. Id. at 1247, 1249–51. Read Carithers.

Together, these rulings explain why a repair estimate should be accompanied by evidence addressing necessity, causation, responsibility, and chronology. A legal theory cannot supply missing construction facts.

A later application: MAC Contractors and potential coverage

In Southern-Owners Insurance Co. v. MAC Contractors of Florida, LLC, No. 20-10840 (11th Cir. July 29, 2020), the Eleventh Circuit again applied J.S.U.B., Pozzi Window, Auchter, and Carithers.

The underlying complaint alleged construction defects and damage at a residence but did not specify which subcontractors performed particular work. The court concluded that the allegations permitted the possibility that one subcontractor had damaged another subcontractor’s nondefective work. That potential defeated summary judgment for the insurer on the ground that no property damage had been alleged.

The court left additional exclusion issues for the district court. Its decision was unpublished and therefore should be identified as persuasive rather than binding precedent. Read MAC Contractors.

The decision illustrates an essential distinction between evaluating potential coverage from allegations and proving entitlement to indemnity. An unresolved fact may permit a defense obligation while still requiring evidence before the insurer must pay the claimed loss.

Insurance issues can arise before the construction lawsuit

The Florida Supreme Court addressed the presuit dimension in Altman Contractors, Inc. v. Crum & Forster Specialty Insurance Co., 232 So. 3d 273 (Fla. 2017).

The Court held that Florida’s Chapter 558 notice-and-repair process fell within the policy’s definition of an alternative dispute resolution proceeding and thus could qualify as a “suit.” The policy also required insurer consent to the insured’s participation. The Court expressly left the disputed consent issue unresolved.

Accordingly, Altman should not be read as establishing an automatic duty to defend every Chapter 558 notice. It does establish why the policy’s defense language and consent requirements deserve attention during the presuit process. Read Altman Contractors.

For practitioners, this suggests addressing insurance when the claim is first organized. Waiting until a complaint is filed may leave earlier communications, inspections, expenditures, and participation decisions inadequately considered from a coverage standpoint.

Engineering evidence should explain the physical sequence

These decisions suggest a disciplined approach to expert investigation.

The engineer’s role is to determine and explain the physical facts. Counsel’s role is to understand which factual distinctions the governing law makes significant. That division should produce better questions, not predetermined conclusions.

For example, an investigation may need to determine what condition departed from the plans, specifications, or applicable construction requirements; how that condition affected the structure; what property sustained physical injury; and what observations support the proposed causal sequence.

The expert should also distinguish observed conditions from inferences. Photographs may establish cracking or deterioration. Determining when the condition developed, why it developed, and what work is necessary to address it may require additional analysis.

Repair necessity deserves particular attention. If a proposed method involves removing and rebuilding an allegedly defective component, the technical explanation should identify why that step is required. Is it necessary to reach damaged property? Does the repair sequence require temporary removal? Would a proposed alternative leave the damaged property inadequately restored? Does part of the proposed work instead constitute an improvement or correction of an independent deficiency?

These questions should be answered on their engineering merits. If the evidence does not support a proposed connection, the legal presentation should acknowledge that limitation.

The goal is an explanation that a judge or jury can evaluate: the original condition, the mechanism of damage, the affected property, and the reason for each material repair operation.

Construction records can be as important as the expert report

An expert may explain how damage occurred without knowing which company performed each relevant operation. That information may need to come from contracts, invoices, payment records, project correspondence, photographs, or testimony.

A careful investigation should reconstruct the actual division of work. The general contract may describe the overall project while separate agreements allocate excavation, concrete, waterproofing, framing, roofing, coatings, and finishes among different participants.

The contractual paperwork also may not fully describe what happened on the site. A subcontractor may have performed additional work, retained another contractor, or returned to modify an earlier installation. Those possibilities require evidence rather than assumptions.

The same care should extend to chronology. Project completion, the onset of physical damage, the first observable symptom, the owner’s discovery, and the eventual claim are different events. A useful factual record preserves those distinctions instead of treating the date of discovery as the answer to every timing question.

The repair demand should explain what each category accomplishes

A global replacement estimate may be useful for budgeting. For litigation and coverage analysis, a more detailed presentation is often necessary.

A practical approach is to separate the proposed work into identifiable categories: correction of the original deficiency; restoration of resulting physical damage; removal and replacement necessary to accomplish that restoration; and any separate upgrades or additional work.

Those categories are a method of organizing the evidence, not a declaration that every expense in a particular category is covered. The policy and the proven facts still control.

The value of that organization is explanatory. It permits the parties and the court to examine why a particular expense is claimed and whether it relates to insured damage. It also permits candid evaluation of a mixed claim in which some costs may be recoverable from the responsible contractor even if they are not payable under the liability policy.

An owner should understand that distinction before making settlement decisions. Likewise, a contractor assessing personal exposure should understand which portions of the demand may remain outside the insurer’s obligation.

The actual policy remains decisive

The enduring importance of J.S.U.B. is its insistence on reading the insurance contract as a whole.

The decision does not promise coverage whenever a subcontractor participated. It does not make every failed component property damage. It does not eliminate the need to establish when damage occurred. And it does not neutralize policy language materially different from the language the Court examined.

It does establish that damage to a contractor’s completed project cannot be rejected categorically merely because defective construction caused it. The occurrence requirement, the property-damage requirement, the exclusions, and the exceptions must each receive their proper analysis.

For that reason, a coverage assessment should compare the actual facts with the complete policy rather than with a generalized description of “construction insurance.” An exclusion quoted in a reservation-of-rights letter should be read with its definitions, limitations, and exceptions. A favorable exception should receive the same scrutiny.

The analysis also should remain tied to the particular insurer and insured. A conclusion about the general contractor’s coverage does not automatically resolve coverage under a subcontractor’s policy, an additional-insured endorsement, or another form of insurance.

Preparing a construction dispute for meaningful recovery

Construction litigation is not complete when someone identifies a defect. A persuasive case must connect responsibility, physical consequences, and the requested remedy through admissible evidence.

Where insurance may respond, that preparation must also account for the coverage questions. The work allocation must be understood. The damage must be distinguished from the deficient performance. The repair method must be explained. The policy must be read in full.

That is the practical significance of J.S.U.B. and the decisions applying it. They provide substantial grounds for coverage in appropriate cases, while requiring precision about what happened and what the insurance contract promises.

For an owner confronting a costly failure—or a contractor facing a substantial demand—the quality of that investigation can determine whether the dispute is presented as an undifferentiated complaint about poor workmanship or as a supported claim identifying the resulting damage and the obligations it implicates.

Jeffrey T. Donner is a Florida trial attorney with more than 27 years of experience representing clients in state and federal courts. His practice includes commercial litigation and disputes involving property, construction, and insurance coverage.