Opinion ID: 2336887
Heading Depth: 3
Heading Rank: 4

Heading: Insuring Agreement and the Definition of Property Damages

Text: Travelers also argues that our holding in Vernon Williams requires a conclusion that the damages suffered by Hilcom are not property damage as defined in the insuring agreement. In Vernon Williams , we stated that a claim limited to faulty workmanship or materials does not constitute `injury to or destruction of tangible property.' 591 S.W.2d at 763 (quoting St. Paul Fire & Marine Ins. Co. v. Coss, 80 Cal.App.3d 888, 145 Cal. Rptr. 836, 839 (Cal.Ct.App.1978)). Because the result in Vernon Williams was based upon other grounds  the CGL exclusions  we did not apply this rule to the facts of that case or expound upon its implications for future cases. Vernon Williams , however, cited with approval St. Paul Fire & Marine Insurance Co. v. Coss , a case that is instructive in our analysis. In that case the court held as follows: We do not think that the mere inclusion of a defective component, where no physical harm to the other parts results therefrom, constitutes `property damage' within the meaning of the policy. For example, if an automobile crash results from the failure of its defective tire, the defective component can be said to have caused `property damage' to the finished product. If, however, some of the tires purchased by the automobile manufacturer are found to be defective and the manufacturer therefore withdraws its cars from the market, there has not been `injury to or destruction of tangible property[.]' St. Paul Fire, 145 Cal.Rptr. at 839 (quoting Hamilton Die Cast, Inc. v. U.S. Fid. & Guar. Co., 508 F.2d 417, 419-20 (7th Cir. 1975)). This passage makes clear that a claim limited to faulty workmanship or materials is one in which the sole damages are for replacement of a defective component or correction of faulty installation. We conclude that Hilcom's claim is not limited to faulty workmanship and does in fact allege property damage. Moore's subcontractor allegedly installed the windows defectively. Without more, this alleged defect is the equivalent of the mere inclusion of a defective component such as the installation of a defective tire, and no property damage has occurred. The alleged water penetration is analogous to the automobile accident that is caused by the faulty tire. Because the alleged defective installation resulted in water penetration causing further damage, Hilcom has alleged property damage. Therefore, we conclude that Hilcom has alleged damages that constitute property damage for purposes of the CGL.