Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 9 minutes
Few questions come across our desks more often than this one: “My customer is suing me over the work. Will my general liability policy do anything?” The honest answer has always been “it depends,” and for years, part of what it depended on was something most contractors never think about. It came down to how the lawsuit was written.
In April 2025, the Oregon Supreme Court took a hard look at that idea in Twigg v. Admiral Insurance Co. The case started with a cracked garage floor and ended with a ruling that every contractor carrying general liability insurance should understand, whether you work in Oregon or not. Let’s walk through what happened, what the court decided, and what we think it means for the policy sitting in your file cabinet.
A Garage Floor That Kept Getting Worse
The story begins in 2011, when a couple hired Rainier Pacific Development LLC to build a home on a sloped lot in Oregon. After they moved in, problems started showing up. Among them was a garage floor that cracked and sloped toward the house, which is exactly the direction you do not want water running.
The homeowners took the builder to arbitration, and the two sides reached a settlement. As part of that settlement, the contractor agreed to perform specific repairs, including fixing the garage floor.
That repair is where things went sideways. A subcontractor resurfaced the floor with a lightweight concrete overlay, but control joints were never installed. The manufacturer had published specific installation instructions, along with warnings about what could happen if they were skipped. According to the court record, those instructions were not followed, and the new surface developed the same kind of voids and cracks the manufacturer had warned about. The floor ended up in worse condition than before anyone touched it.
So the homeowners went back to arbitration, this time claiming the contractor had broken the repair agreement. The arbitrator agreed and awarded them $150,000. A court turned that award into a judgment. When the homeowners could not collect directly from the contractor, they did what injured parties often do. They turned to the contractor’s liability insurer, Admiral Insurance Company. Admiral said no.
Why the Insurer Said the Policy Didn’t Apply
To understand Admiral’s position, you need to know one word that shows up in nearly every commercial general liability form: “occurrence.” The standard ISO policy pays only for property damage caused by an occurrence, and it defines “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”
That wording is intentional. A liability policy is designed to respond to accidents. It is not a performance bond, and it is not meant to guarantee that you will do the job you promised. The trouble is that “accident” itself is usually left undefined, and courts have spent decades arguing about where an honest mistake ends, and a broken promise begins.
Admiral leaned on an earlier Oregon decision, Oak Crest Construction Co. v. Austin Mutual, from 2000. Its argument was straightforward. The homeowners won on a breach-of-contract claim, not a negligence claim. Damage that flows solely from a breach of contract is not an accident. No accident means no occurrence, and no occurrence means no coverage.
The trial court bought that argument. So did the Oregon Court of Appeals. For a while, it looked like the label on the claim would decide everything.
What the Oregon Supreme Court Decided
The state’s highest court saw it differently, and it wasn’t close. In a unanimous opinion written by Justice DeHoog, the court reversed both lower courts.
The heart of the ruling is simple. Whether a claim involves an “accident” does not turn on the plaintiff’s pleading decisions. It turns on whether there is a factual basis for holding the contractor liable in tort. In other words, the homeowners did not have to sue for negligence. They had to show that the facts could support one.
The court pointed to evidence that the subcontractor ignored the manufacturer’s instructions and warnings, and that the cracking matched what those warnings described. Because there were genuine factual disputes about whether that amounted to negligence, the court held that the trial court should not have granted Admiral summary judgment.
The court also said Oak Crest had been read too broadly. That earlier case denied coverage because there was no evidence of accidental harm, not simply because nobody filed a tort claim.
Here is the part that often gets lost in the headlines, though. The ruling only answered the first question. Admiral had also pointed to policy exclusions, including those covering damage to a contractor’s own work and a pre-existing damage exclusion. The Supreme Court did not decide those issues. It sent the case back to the trial court, where those arguments were still on the table.
What This Case Tells Us as Insurance Professionals
We read coverage decisions like this one with a specific question in mind: what should a contractor actually do differently after hearing about it? A few lessons stand out.
The facts may matter more than the paperwork. Contractors are often sued for breach of contract because that is the easiest claim for a homeowner’s lawyer to bring. After Twigg, at least in Oregon, that framing alone should not shut the door on coverage if the facts point to careless work that caused unintended damage.
Getting past “occurrence” is not the finish line. We see this misunderstanding a lot. A contractor hears that a court found that coverage “could” apply and assumes the claim will be paid. In reality, exclusions decide a large share of construction defect disputes. The occurrence question just gets you in the door.
Your own work is still the hardest part to insure. The cost of tearing out and redoing defective work is generally treated as a business risk, while some mistakes in design or specifications fall more squarely into professional liability territory. Where commercial general liability more often comes into play is resulting damage to other property. If you want to understand that line better, our article on whether general liability covers the quality of your work walks through it in detail.
Where the job sits changes the answer. State courts are genuinely split on this. Oregon now joins states like Illinois, Indiana, Connecticut, and West Virginia, where courts have found that faulty workmanship can be an occurrence under the right facts. Iowa, Kentucky, and Ohio have taken a narrower view. If you work across state lines, the same claim could be handled very differently depending on where the project was built.
Settlement repair agreements deserve a second look. The coverage fight in Twigg arose from a settlement that required specific repairs. When a contractor signs one of those, it is making new written promises. Before you agree to fix work under a formal settlement, call your agent and make sure the original claim was reported to your carrier on time.
Limits matter when the numbers climb. The award in this case was $150,000 for one garage floor. Defect claims on larger projects can run much higher, which is why many contractors carry excess liability coverage above their GL policy limits.
Pull Out Your Policy and Check These Five Things
You don’t need to be a coverage attorney to spot the provisions that matter most in a case like this. If you have never read past the first page, start with our guide on how to read your declarations page. Then here is where we would look if we were reviewing your policy with you.
- The subcontractor exception. Standard CGL forms often restore coverage when the damaged work was performed by a subcontractor on your behalf. Some policies strip that exception out by endorsement, with ISO form CG 22 94 being a common example. If you sub out work, find out whether that endorsement is on your policy. Our overview of CGL endorsements for contractors explains how endorsements reshape a base form.
- Prior or progressive damage exclusions. These can bar claims for damage that started before your policy began. Construction defects tend to cause slow, hidden damage, so this wording matters more than most contractors realize.
- Residential and multi-unit restrictions. Some contractor policies limit coverage for tract homes or multi-family projects. We explain how those work in our piece on multi-unit exclusions, and our list of contractor GL exclusions by trade covers others worth knowing.
- Your completed operations limit. Defect claims usually surface after the job is finished and draw from the aggregate of products and completed operations. Our guide to general liability limits and definitions shows how that aggregate is separate from the general aggregate.
- Whether your coverage has stayed continuous. CGL is typically written on an occurrence basis, so a gap between policies can leave damage that appears later without a home. Our article on additional insured and completed operations coverage covers why continuity matters.
If you want the bigger picture on how defect claims play out, our guide to construction defects and general liability insurance is a good next read. For real-world examples of how contractor claims unfold, see our contractor claim scenarios. And if you run projects with multiple trades, this breakdown of multi-contractor lawsuits shows how quickly one small mistake can pull everyone in.
Frequently Asked Questions
Does general liability cover faulty workmanship?
It depends on the state, the facts, and the policy wording. The cost to fix your own defective work is usually not covered, but resulting property damage may be covered if a court finds it was caused by an occurrence and no exclusion applies.
Does the Twigg ruling apply outside Oregon?
The decision is binding only in Oregon. Courts in other states may find its reasoning persuasive, but many states already have their own precedent on faulty workmanship.
Did the homeowners end up getting paid by the insurer?
The Supreme Court decided only that the claim could involve an occurrence. It sent the case back to the trial court, where the insurer’s exclusion arguments remained open.
Would it matter if a subcontractor did the defective work?
It can. Many CGL forms include an exception that may restore coverage for damage to your work when a subcontractor performed it, unless an endorsement removes that exception.
When should I tell my insurer about a customer complaint?
Most policies require prompt notice of an occurrence or claim. Reporting late can create a separate coverage issue, so talk to your agent as soon as a dispute looks like it could become a claim.
The Bottom Line
Cases like Twigg are a reminder that coverage often hinges on a handful of words most people never read until something goes wrong. The contractor in this case may or may not receive a paid claim, depending on how the exclusions apply. What we do know is that the time to learn how your policy handles completed work, subcontractors, and settlement repairs is before a homeowner’s attorney sends a letter.
If you would like a licensed agent to walk you through your general liability policy, our team at USA Business Insurance reviews contractor coverage every day. You can reach us at 888-900-0205, or learn more about insurance for general contractors.
Case details are drawn from the published opinion in Twigg v. Admiral Insurance Co., 373 Or 475, 568 P.3d 156 (2025). This article is for educational purposes only and is not legal advice.
