This story is reprinted with permission from FC&S Legal , the industry's only comprehensive digital resource designed for insurance coverage law professionals. Visit the website to subscribe . The U.S. Court of Appeals for the Seventh Circuit, affirming a decision by the U.S. District Court for the Northern District of Illinois, has ruled that a subcontractor's alleged negligence was an “occurrence” for purposes of a commercial general liability (“CGL”) insurance policy. The Case The board of managers of 200 North Jefferson Tower Condominium Association filed a lawsuit in an Illinois state court seeking to recover damages as the result of allegedly faulty workmanship on the building. James McHugh Construction Company, the general contractor, and National Decorating Service, Inc., a subcontractor retained by McHugh Construction to perform all of the painting work, were among the defendants. The newly constructed multi-story building allegedly suffered water damage caused by the failure of National Decorating to apply an adequate coat of sealant to the exterior of the building. Westfield Insurance Company, National Decorating's CGL insurer, went to court for a declaration that it had no duty to defend or to indemnify National Decorating or McHugh Construction. The district court ruled that Westfield had a duty to defend. Westfield appealed to the Seventh Circuit, arguing that National Decorating's alleged failure to apply a sufficiently thick coat of paint to the exterior of the building did not constitute an “accident” under the policy and that, absent an “accident,” there had been no “occurrence.” The Westfield Policy The Westfield policy provided that the insurer would: [P]ay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply. It defined: property damage as the: [p]hysical injury to tangible property, including all resulting loss of use of that property. The policy covered: property damage caused by an: occurrence , defined as an: accident, including continuous or repeated exposure to substantially the same general harmful conditions. The Seventh Circuit's Decision The Seventh Circuit affirmed. In its decision, the circuit court explained that an “accident” was “an unforeseen occurrence, usually of an untoward or disastrous character or an undesigned, sudden, or unexpected event of an inflictive or unfortunate character.” Therefore, it continued, Illinois courts have determined that damage to a construction project that occured as a result of a construction defect did not constitute an “accident” or “occurrence” because it was “the natural and ordinary consequence of faulty construction.” The circuit court declared, however, that this did “not foreclose the defendants' arguments that the alleged damage could fall within the policy's coverage” and, therefore, that it triggered a duty to defend. That's because, under Illinois law, “negligently performed work or defective work” could give rise to an “occurrence” under a CGL policy, the circuit court said. This was true, the circuit court added, where, as in this case, the policy defined an “occurrence” to include not only an accident, but also “continuous or repeated exposure to conditions.” The Seventh Circuit concluded: Here, the underlying complaint allege[d] that National Decorating was negligent. This [was] sufficient to satisfy the policy's occurrence requirement when determining whether there [was] a duty to defend at this juncture in the litigation. The case is Westfield Ins. Co. v. National Decorating Service, Inc., No. 16-1439 (7th Cir. July 13, 2017). Attorneys involved include: For WESTFIELD INSURANCE COMPANY, Plaintiff – Appellant: David S. Osborne, Attorney, Christopher J. Pickett, Attorney, LINDSAY, RAPPAPORT & POSTEL, Chicago, IL. For NATIONAL DECORATING SERVICE, INC., Defendant – Appellee: Kent J. Cummings, Attorney, Stephen R. Swofford, Attorney, Kevin R. Sido, Attorney, HINSHAW & CULBERTSON LLP, Chicago, IL. For JAMES MCHUGH CONSTRUCTION CO., Defendants – Appellees: Christopher Cano, Attorney, Robert J. Franco, II, Attorney, Scott Owen Reed, Attorney, FRANCO & MORONEY LLC, Chicago, IL. For 200 NORTH JEFFERSON, LLC, MCZ/JAMESON DEVELOPMENT GROUP, LLC, a foreign company, Defendants – Appellees: Jean Gallo Wine, Attorney, Charles H. Wahtola, III, Attorney, STEIN RAY LLP, Chicago, IL. Steven A. Meyerowitz, Esq., is the Director of FC&S Legal, the Editor-in-Chief of the Insurance Coverage Law Report, and the Founder and President of Meyerowitz Communications Inc. As FC&S Legal Director, Mr. Meyerowitz, a member of the team that conceptualized FC&S Legal, provides daily analysis and commentary on the most significant insurance coverage law decisions from courts across the country and news regarding legislative and regulatory developments. A graduate of Harvard Law School, Mr. Meyerowitz was an attorney at a prominent Wall Street law firm before founding Meyerowitz Communications Inc., a law firm marketing communications consulting company.