No homeowner coverage for defective workmanship or mold
Hometowne Building Company built a house for a customer in South Lyons and then experienced problems with water seepage and mold. After several unsuccessful attempts at remediation, the owner sued Hometowne and ultimately, one of its insurers, the North American Specialty Insurance Company (NASIC) settled the claim with the owners. NASIC then sued Amerisure Mutual to force it to contribute to the settlement. Amerisure argued that two exclusions in its policy let it off the hook, and the Court of Appeals agreed.
The Court concluded that the "defective workmanship" exclusion precluded coverage for any damage to the structure caused by mistakes made by Hometowne. This would leave limited liability for Amerisure to cover injury or damage to contents caused by defective workmanship, however, the policy also contained a "fungi or bacteria" exclusion which eliminated any contents coverage for damage caused by mold, fungi or mildew or their ramifications.