I recently counseled a client on this issue and advised him to consider the adverse consequences before allowing his General Liability policy to non renew. Most contractors mistakenly believe that their General Liability policy will respond to a lawsuit as long as the policy was in force during the construction (when the alleged negligent act occurred). This is a reasonable assumption;however, the General Liability policy language calls for a different result due to its “occurrence based trigger”.

In order for coverage under a General Liability policy to be possibly triggered, the bodily injury or property damage must occur while the policy is in force. The problem with allowing a policy to non renew is that there will be no coverage for any bodily injury or property damage that occurs after the policy is no longer in force.

As a result, a home builder would have no General Liability coverage in the event that any of the following scenarios occur after the non renewal:

*Fire damage caused by faulty wiring destroys house, contents, and injures an occupant.

*Disappearing staircase that was not properly bolted collapses, resulting in a broken hip to home owner.

*Gradual water intrusion due to faulty flashing continues to damage sheathing and two by fours under siding.

After bringing these potential problems to the attention of our client, he decided to pay his renewal bill for his General Liability as he did not want to face these uninsured risks.