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New Jersey Appellate Court Holds the EIFS Exclusion Is Clear And Unambiguous

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Crum & Forster Insurance Company v. The Breese Corporation, A3880-13 (App. Div. April 13, 2016). In a case of first impression, the New Jersey Appellate Division interpreted the scope of the EIFS/DEFS exclusion in a commercial general liability policy at issue in a construction defect case. The “EIFS/DEFS exclusion” has been a part of commercial general liability policies issued to contractors for well over a decade and was incorporated into policies in response to litigation stemming from the use of what was commonly referred to as “synthetic stucco” or EIFS. In keeping with the intent of the exclusion, the Court held that the language of the exclusion is clear and unambiguous and that it precludes coverage for damage associated with a contractor’s exterior work at a construction project if EIFS is installed at that project. 

The Court also found ample evidence in the record to support the trial court’s finding that the EIFS product installed at the Project met the definition of EIFS in the exclusions, and that “the legal conclusion that flowed from those findings was inescapable, i.e. the exclusion applied.” The Breese decision is significant in that the Appellate Division has confirmed that the EIFS Exclusion will be enforced as written, and will exclude that which it was intended to exclude, i.e. damage flowing from a contractor’s exterior work at a project, if EIFS is installed at that project. While it is one of few cases throughout the country interpreting this exclusion, it is consistent with other jurisdictions which also find the language of the exclusion to be clear and unambiguous.