Plaintiff was the developer and general contractor of a residential development. It was named as an additional insured on its subcontractors’ CGL policies. The additional insured coverage extended to claims for liability “arising out of” the named insured’s on-going operations. “Arising out of” is construed broadly, only loosely linking a factual situation with the event creating liability, requiring only a minimal causal connection or incidental relationship. “On-going operations” refers to work the subcontractor performs under the subcontract. This decision holds that the fact that the plaintiffs in the underlying lawsuit all bought their homes (and thus acquired their claims) only after the insured subcontractor completed its operations does not show that their claims did not arise out of the subcontractor’s on-going operations. Here, the homeowners complained of water intrusion which could have been caused by the subcontractors’ improper work and, without deciding whether it is necessary to show damage incurred before completion of the work, here the water intrusion damage could well have begun while the work was on-going. In all events, “arising out of” is much broader and different from “during.” So plaintiff didn’t have to show that the underlying claims arose during the subcontractors’ on-going work.
California Court of Appeal, Fourth District, Division One (Aaron, J.); November 14, 2017; 17 Cal.App.5th 187.