Tender, Tender, Who Has Coverage?
Ridgeline Builders is a general contractor with an occurrence-form CGL policy: $1,000,000 each occurrence, $2,000,000 general aggregate. In its current policy year the carrier already paid $1,800,000 defending and settling an unrelated job-site injury. Ridgeline subcontracted all roofing to Summit Roofing, which carried a $1,000,000 CGL policy and named Ridgeline as an additional insured on an endorsement limited to "ongoing operations." The building was completed in January 2024. In March 2025 the owner reported leaks traced to Summit's defective flashing and sued Ridgeline for $600,000, alleging damage to interior finishes and to the owner's stored inventory. Ridgeline tenders the suit to both carriers.
1. Which policy responds to the owner's suit, and how does completed operations change the analysis of each one?
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Run the tender through each policy separately.
Summit's policy as additional insured - likely a dead end. The AI endorsement is limited to ongoing operations. Roofing operations ceased when the building was completed in January 2024; the loss manifested in March 2025. A completed-operations AI endorsement (the broader form) would respond; this one does not. Summit's own policy still responds to the suit against Summit, but that does not help Ridgeline unless the pleading alleges Ridgeline's independent negligence.
Ridgeline's own CGL - the real target, with a catch. Property damage occurring during the policy period from an occurrence triggers the insuring agreement. The "your work" exclusion would ordinarily bar damage to the contractor's own completed work, but the standard form carves back work performed by a subcontractor. Because Summit did the roofing, the exclusion is restored and the resulting damage to interior finishes and the owner's inventory - other property, not Summit's own flashing - is the covered piece.
The critical distinction. The cost to remove and replace Summit's defective flashing itself is not covered; that is the insured's (or subcontractor's) work, not damage to other property. Only the consequential damage downstream is.
Also check. Whether Ridgeline's policy was claims-made or occurrence, and whether it was still in force in March 2025.
2. How does the depleted aggregate affect the outcome, and does the carrier still owe a defense?
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Do the arithmetic before assuming a $600,000 check.
- Each occurrence limit is $1,000,000. The $600,000 demand is under that.
- But the general aggregate is $2,000,000 and $1,800,000 has already been paid. That leaves $200,000 of aggregate capacity for the remainder of the policy year.
- Defense costs on an occurrence-form CGL are paid in addition to the limits, so the carrier can and must defend even though only $200,000 of indemnity remains.
- The practical result: the carrier defends, and if the case is worth $600,000, only $200,000 of indemnity is available; the balance is Ridgeline's exposure.
- If this loss were paid, the aggregate would be exhausted and later occurrences in the same policy year would have defense only, no indemnity.
Judgment points. First, do not confuse the per-occurrence limit with available money. Second, the insurer's duty to defend is broader than its duty to indemnify and is measured by the allegations, not by the remaining aggregate. Third, Ridgeline should be counseled now that its own pocket is at risk and that a tender back to Summit or a direct claim against Summit's policy may be the better commercial play.
3. Ridgeline argues that the carrier must pay the entire $600,000 because the lawsuit 'arises out of' the roofing. Evaluate that argument.
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"Arising out of" gets Ridgeline into coverage; it does not get Ridgeline to a full payout. Three separate barriers stand between the argument and a check.
- The exclusion still shapes the loss. Even with the subcontractor exception, the policy never pays to repair or replace the defective work itself. If the $600,000 includes the cost of tearing off and redoing the flashing, that component is excluded. Ridgeline owes the carrier a breakdown of the demand.
- Other insurance and the AI endorsement. If Summit's carrier owes anything for Summit's own work, the two policies interact. Ridgeline's carrier may be excess or may seek contribution depending on the other-insurance conditions.
- Aggregate. Only $200,000 remains. A covered $600,000 loss still produces a $400,000 shortfall.
The correct advice to Ridgeline is triage: document the components of the damage, preserve the tender to Summit's carrier even if the AI endorsement is narrow, and budget for the aggregate gap. The phrase "arising out of" is broad enough to establish a duty to defend, and that is precisely what the carrier will do - defend, while paying no more than its remaining limit.