construction defect
Generally speaking, a deficiency in the design or construction of a building
or structure resulting from a failure to design or construct in a reasonably
workmanlike manner, and/or in accordance with a buyer's reasonable expectation.
The most dangerous defects have the capacity to fail, resulting in physical
injury or damage to people or property. However, many defects present no increased
risk of injury or damage to other property but nevertheless cause harm to the
property owner in the form of loss of use, diminution in value, and extra expenses
incurred while defects are corrected. This latter type of defect is often referred
to as a passive defect. Whether, and to what to extent, coverage applies in
liability policies for claims alleging construction defects is a matter of serious
debate both in insurance circles and in the courts. (Note: Many states have
more specifically defined the term "construction defect" for purposes of applying
statutes that dictate processes for remedying and litigating construction defect
claims. These statutory definitions vary by state.)
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CRM VI.E