A house was built under contract too close to the property line, a violation of zoning requirements. The property owners sued the contractor for the cost of correcting the problem, alleging that the contractor undertook to "site, construct and landscape" the house. The contractor brought an action against its insurer, alleging that the insurer had a defense duty. The insurer appealed a trial court denial of its motion for summary judgment.

The insurer relied on its policy's "work product" exclusion, which provided: "We won't protect against claims for property damage to your products where the damage arises out of the products themselves or any part of them. And we won't protect against claims for property damage to completed work you performed where the damage arises out of the work itself."

The appeal court noted that the property owners' complaint against the contractor "was for damage to (the contractor's) work product, the sited house, and arose out of (the contractor's) allegedly deficient siting." It said: "To find coverage would turn the policy into a guarantee of the contractor's workmanship, exactly what the policy is intended to exclude. Since there is no possibility of coverage, there is no obligation to defend."

The trial court ruling was reversed and judgment was entered in favor of the insurance company.

(GARNEAU ET UX., Plaintiff-Appellee v. CURTIS & BEDELL, INC., Defendant v. INS. CO. OF NORTH AMERICA, Third-Party Defendant-Appellant. Vermont Supreme Court, No.91-183. April 24, 1992. CCH 1992 Fire and Casualty Cases, Paragraph 3797.)