The Ohio Supreme Court recently determined that underlying obligations of defective workmanship are not claims for "property damage" caused by an "occurrence." Westfield Ins. Co. v. Custom Agri. Systems, Inc., 2012 Ohio LEXIS 2485 (Ohio Oct. 16 2012).
The case evolved from a certified question from the United States Court of Appeals for the Sixth Circuit. A property owner sustained damages from defects in a steel grain bin constructed by the insured, Custom Agri Systems, Inc. When the property owner sued, Custom tendered the suit to Westfield, its insurer. Westfield argued none of the claims against Custom for defective construction or consequential damages resulting from the defective construction were "property damage" caused by an "occurrence."