Oregon Supreme Court Expands CGL Coverage for Construction Defects: Twigg v. Admiral Insurance Company

By Cameron Zangenehzadeh and Seth Row

Background: A Repair Gone Wrong and a Coverage Dispute

Businesses and homeowners in Oregon often assume their insurance will cover a contractor’s faulty work. That assumption was put to the test in Twigg v. Admiral Insurance Co., 373 Or. 475 (2025), an Oregon Supreme Court decision with big implications for policyholders. The case started when a contractor, Rainier Pacific, repaired a home’s concrete garage floor using an overlay product (Ardex), but failed to install control joints, which the homeowner contended were required. This mistake led to unintended property damage: the new surface developed voids and cracks, leaving the garage floor in worse shape than before. The homeowner then entered into a repair agreement with the contractor that had very specific performance requirements for the new floor, but the contractor failed to meet those requirements, according to the homeowner. An arbitrator later found Rainier Pacific’s work defective and awarded the homeowners $150,000 in damages to fix the floor​. A trial court entered judgment against Rainier Pacific in the amount of the arbitrator’s award.

When the homeowners sought to execute on that judgment (those efforts failed), they turned to Rainier Pacific’s insurance company—Admiral Insurance—under its Commercial General Liability (CGL) policy. CGL policies are a common safeguard for contractors, meant to cover the contractor’s liability for property damage or injuries caused by an “occurrence” (defined, in part, as an “accident” under the policy). Here, the homeowners argued that Rainier Pacific’s poor workmanship had caused “property damage” to their garage floor, triggering Admiral’s duty to indemnify (pay for the loss). Admiral, however, denied the claim, setting the stage for a legal battle over whether Twigg’s damages were caused by an “occurrence” as required by the insuring agreement, or just a breach of the very exacting standards in the repair contract.

The Insurance Company’s Argument: No “Occurrence” Because It’s Breach of Contract

Admiral Insurance’s primary argument was a technical one: the homeowners’ arbitration award was based on breach of contract, not on any tort claim like negligence. In Admiral’s view, this meant the loss was not caused by an “accident” or “occurrence” as the policy required​. Admiral relied on Oak Crest Construction Co. v. Austin Mutual Insurance Co., 329 Or. 620, 627, 998 P.2d 1254 (2000), which had suggested that an accident (for CGL coverage purposes) occurs only if the property damage “‘results, in some sense, from a tort, i.e., a breach of some duty imposed by law.’”  Twigg, 373 Or. at 482, 495 (quoting Oak Crest, 329 Or. at 627). In plainer terms, Admiral contended that if a contractor is only liable for breaching a contract (failing to do what was promised), and not for breaching a legal duty independent of the contract, then the damage isn’t from an “accident”—it’s just a breach, which CGL insurance doesn’t cover.

Both the trial court and the Oregon Court of Appeals agreed with the insurer on this point. The trial judge reasoned that Oak Crest was “indistinguishable” from the Twigg case: Rainier Pacific’s liability was solely for shoddy work under a contract, with no separate duty of care violated beyond the contract. In other words, because the homeowners pursued Rainier Pacific for breaching the repair agreement (a contract) rather than suing for negligence, the courts viewed the damage as non-accidental for insurance purposes. The Court of Appeals echoed that logic, holding that Rainier Pacific’s liability “arose solely from breach of its contractual duties,” which by definition did not meet the policy’s requirement of an accidental “occurrence.” Twigg v. Admiral Ins. Co., 324 Or. App. 259, 272-73, 525 P.3d 478 (2023). The mere fact that the claim was framed as breach of contract was enough for those courts to affirm Admiral’s motion for summary judgment.

This interpretation left many policyholders uneasy. It suggested that if a construction defect is handled as a contract dispute (as is common: policyholders often sue contractors for breach of the construction contract or warranty), insurance coverage might evaporate, even if the underlying facts look like an accident (defective work causing unintended property damage). A common misconception in insurance law is exactly this: that CGL insurance won’t cover property damages couched as a breach of contract. Policyholders often hear insurers insist that any loss tied to a contract is not an insurable “accident.” Indeed, Admiral’s stance in Twigg exemplified that misconception, effectively equating no tort lawsuit with no coverage. For policyholders, this is a scary proposition: if your contractor does something wrong and only a contract claim is pleaded in arbitration or litigation, does your insurance really provide no help for the resulting damage?

Oregon Supreme Court’s Ruling: Focus on the Facts, Not the Legal Labels

The Oregon Supreme Court adopted a policyholder-friendly view, holding that coverage under a CGL policy depends on whether the facts show an accidental harm—not on whether the claim is framed as a tort or contract. In a unanimous opinion by Justice DeHoog, the Court reversed the lower courts and clarified that “[w]hether an insurance claim seeks recovery for an ‘accident’ does not depend on a plaintiff’s pleading decisions . . . but depends instead on whether there is a basis in fact for imposing tort liability.” Twigg, 373 Or. at 477.

Contrary to Admiral’s argument that a contract-only claim bars coverage, the Court found that even if the underlying litigation is for breach of contract, coverage can exist if the facts reflect negligent conduct. The Court explained that Oak Crest had been misread: it didn’t require a formal tort claim to trigger coverage. Rather, Oak Crest denied coverage because there was no evidence of accidental harm, not because a tort claim was absent.

Because Twigg presented facts supporting negligence—defective workmanship that caused physical damage—the Court found the term “occurrence” ambiguous and construed it in favor of coverage, as required by Hoffman Construction Co. v. Fred S. James & Co., 313 Or. 464, 469-71, 836 P.2d 703 (1992). The Court concluded: “plaintiffs were not required to formally allege a tort claim or obtain an award in tort. Rather, plaintiffs were required to establish that there was a basis in fact for imposing tort liability.” Twigg, 373 Or. at 501.

This decision affirms that coverage turns on whether the insured caused unintended damage by breaching a standard of care—not on the legal label applied in the underlying dispute.

Why Twigg Matters: Accidental Construction Damage Is Covered Damage

The Twigg decision dispels the myth that a contractor’s liability for defective work is uninsurable if pursued as a breach of contract. If the facts show that faulty workmanship caused unintended property damage—such as cracking or collapsing due to negligence—then coverage under a CGL policy is possible.

This does not mean every contract breach is insurable. There must be actual “property damage” stemming from an “accident.” In Twigg, that was clear: Rainier Pacific’s subcontractor failed to follow critical installation steps, ignored warnings, and lied about manufacturer approval—behavior that met the standard for negligence. The garage floor was physically damaged, and a jury could find the contractor negligent. Twigg confirms that coverage may exist even if the plaintiff only pursued breach of contract, so long as the facts support accidental harm.

The Supreme Court remanded the case, holding that Admiral couldn’t escape coverage merely because the homeowner’s claim was framed as contractual. Twigg thus strengthens the rights of policyholders to obtain coverage for unintended consequences of defective work, as long as the harm qualifies as an “occurrence.”

Clearing Up Misconceptions About “Occurrence” and Faulty Work

Twigg clarifies that “occurrence” under Oregon law includes unintended harm from negligent workmanship. While insurers often claim that faulty work is merely a business risk, the Oregon Supreme Court joined the majority of jurisdictions in recognizing that contractors don’t intentionally botch jobs. If defective work causes damage beyond the work itself, it is usually accidental.

Justice DeHoog underscored that the proper focus is not on “plaintiff’s pleading decisions,” but “whether there is a basis in fact for imposing tort liability.” Twigg, 373 Or. at 477. Thus, the same conduct—such as negligent installation—can support both a breach of contract claim and a negligence claim. That overlap does not preclude coverage.

The Court also rejected the insurer’s effort to bar coverage based on exclusions before establishing that an “occurrence” existed. Although Admiral pointed to exclusions like “your work” or pre-existing damage, those were not yet ruled upon. Twigg ensures that policyholders aren’t denied coverage at the outset based on rigid definitions of “accident.” Instead, if the facts support a negligence theory, the insured gets to argue for coverage on the merits.

Next Steps for Policyholders Facing Denials

If you’re a policyholder dealing with property damage caused by a contractor’s mistakes, Twigg is a reminder not to take “no coverage” as the final answer—especially if an insurer denies your claim solely because the liability was characterized as a contract matter. Here are some steps and considerations in light of the Twigg decision:

1. Understand Your Policy and the “Occurrence” Requirement: A standard CGL policy says the insurer will pay those sums the insured is legally obligated to pay as damages because of property damage, but only if caused by an “occurrence.” If your insurer denies a claim saying “this wasn’t an occurrence,” ask why. Is it because they claim the damage was intentional or expected? Or are they saying that because the claim against you was for breach of contract, it doesn’t count as accidental? After Twigg, the latter reasoning is much less credible in Oregon.
2. Focus on the Facts of What Happened: As Twigg shows, what actually happened (the contractor’s error and the resulting damage) is more important than the legal terminology. Gather evidence of how the damage occurred. Was it sudden or unexpected? Did it result from not following instructions or an error in the work? Such facts could establish a “basis in fact for imposing tort liability”—essentially showing the incident was caused by negligence. If so, point this out to the insurer, citing the Twigg decision, that an accidental outcome from negligent work is an occurrence even if only contract claims were asserted.
3. Cite Twigg and Related Precedents: It may be helpful to reference the Twigg decision in communications with an insurer when disputing a denial. Emphasize that Oregon’s highest court has clarified an accident “does not depend” on how the claim is pleaded​. If the adjusters are familiar only with older law (like Oak Crest), explain that Twigg has updated the landscape and that even Oak Crest acknowledged the possibility of coverage where facts support a negligence theory.
4. Watch for Exclusions (and Counter Them): Even if you clear the “occurrence” hurdle, insurers might invoke other policy exclusions in defective work cases. For example, many CGL policies have exclusions for damage to “your work” (the insured’s own work product) or for damage that was ongoing at the time of policy inception. Admiral Insurance raised some of these in Twigg, such as the j(5) and j(6) workmanship exclusions and a pre-existing damage exclusion​. The courts didn’t ultimately decide those in Twigg, but on remand such issues will likely come up. As a policyholder, review these exclusions. Often, exclusions have exceptions (for instance, the “your work” exclusion usually doesn’t apply if the work was done by a subcontractor, which could preserve coverage). Be prepared to argue why an exclusion doesn’t apply to your facts.
5. Consult Legal Counsel if Needed: Insurance coverage law can be complex, especially when insurers stand firm on a denial. Given the Twigg decision, Oregon policyholders have stronger footing to challenge denials of coverage for accidental damage from faulty workmanship. An experienced insurance coverage attorney can help navigate this process, potentially turning an initial “no” from the insurer into coverage for your loss. Sometimes the mere fact of a new, policyholder-friendly Supreme Court decision can prompt insurers to reconsider and settle a coverage dispute once it’s brought to their attention.

Conclusion

The Oregon Supreme Court’s decision in Twigg v. Admiral Insurance Co. is a landmark for those insured under CGL policies, particularly in the construction industry. It reinforces that when you buy liability insurance, you’re buying protection against accidents—including those that may occur in the course of fulfilling a contract. By looking past legal formalities and zeroing in on the reality of an insured’s conduct and the damage caused, the Court has strengthened policyholder rights to indemnity. Policyholders in Oregon should take heart that if they suffer property damage due to a contractor’s mistake, the law now clearly supports coverage, provided the facts show a basis for imposing tort liability.

Twigg affirms a practical and fair principle: an accident is still an accident, even if it happens under a contract. Policyholders can feel more secure knowing their CGL policies may respond to genuine accidents causing property damage absent any applicable exclusions. As always, if you have questions about your coverage or face a denial, consider reaching out for legal advice. With evolving case law like Twigg, Oregon policyholders have a stronger hand than ever to ensure their insurers pay what they owe when an accident occurs.