Inside This Article:
- A judge issued a default judgment in favor of an Ohio confectionery business after a contractor failed to respond to claims tied to a 2024 demolition incident, WFMJ-TV reported.
- The lawsuit alleged that debris from a nearby building teardown damaged a neighboring business and equipment, with another establishment also reporting impacts.
- Contractors performing demolition work face significant third-party property damage exposure, which can be covered by Construction Insurance policies like Commercial General Liability (CGL) Insurance.
- Gaps in coverage and insufficient limits can leave both contractors and impacted businesses facing substantial out-of-pocket losses.
A court in Columbiana County, Ohio, recently ruled in favor of a Salem-based confectionery business that sought damages following a demolition incident at a neighboring property. The case centered around a November 2024 demolition project on East State Street, where the removal of the Schory Building allegedly caused a wall to topple over and strike the nearby Heggy’s Confectionery store, damaging part of the building and a commercial freezer.
The court’s decision was issued as a default judgment after the contractor named in the lawsuit did not file a response to the claims, WFMJ-TV reported on March 20. Another nearby restaurant also reported impacts tied to the project, and although repair efforts were initially attempted, additional problems prompted the business to hire a separate company to complete the work, according to the news station.
“This is a classic example of how a construction loss can spiral pretty quickly,” said Tyler Pommier, Senior Underwriter, Commercial Insurance, Burns & Wilcox, Chicago, Illinois. “When precautions are not taken, significant damage can happen — not just to the building but the business itself through loss of income and operational disruption.”
This is a classic example of how a construction loss can spiral pretty quickly.
Incidents like this highlight the liability risks contractors face when work extends beyond the jobsite and impacts surrounding properties. A contractor’s Commercial General Liability (CGL) Insurance and other Construction Insurance policies can respond to these incidents.
“If they really end up severely damaging someone’s building, that can start mounting up to hundreds of thousands of dollars,” said Lisa Menanno, Senior Underwriter, Commercial Insurance, Burns & Wilcox, San Diego, California. “It could be your policy limits. In a severe incident, if you do not have Excess Liability Insurance, you could be in trouble.”
If they really end up severely damaging someone’s building, that can start mounting up to hundreds of thousands of dollars.
When construction incidents affect surrounding properties
Construction and demolition work can create significant risks not only to the jobsite itself but also to surrounding properties, particularly in dense commercial areas. Similar incidents have occurred elsewhere, including a December 2025 incident in which crews in Toledo, Ohio, allegedly damaged multiple homes while demolishing nearby nuisance buildings. In 2023, a deadly partial building collapse in Davenport, Iowa, at the beginning of a demolition project damaged adjacent structures and led to multiple claims and lawsuits, according to the Associated Press.
“I have seen claims where a contractor ruined individuals’ fences or went into another homeowner’s property and things have been damaged,” Menanno said. “It is quite common.”
Demolition is high-hazard work, Pommier said, and incidents that involve third-party property damage or bodily injuries can lead to costly legal expenses, project delays, and other impacts. CGL Insurance can cover many of these costs.
“Demolition-related losses are relatively common, unfortunately,” he said. “It is a pretty high-risk operation, which is why it demands a higher premium. The biggest exposure would be their project damaging another business and employees or pedestrians getting hurt, or something falling onto a sidewalk and harming somebody.”
How losses escalate: limits, litigation, and downtime
In the Salem incident, more than one business reported damage. While some demolition-related claims can be small, many escalate rapidly — especially when multiple third parties are affected, increasing the potential scope of liability.
“This sounds like it was a pretty decent-sized loss,” Menanno said. “If there is some severe damage, then you factor in the expense of the attorneys and legal defense, it can add up.”
Standard CGL Insurance policies often carry limits such as $1 million per occurrence, which may not be sufficient in larger losses. Without additional coverage through Excess Liability Insurance, which provides additional liability limits beyond standard policies, contractors can face significant financial exposure, Menanno said.
In the Salem case, the contractor reportedly did not respond to the lawsuit, resulting in a default judgment. “It does not look like they responded to the lawsuit, which definitely does not help. That can turn a manageable claim into something that can spiral out of control,” Pommier said. “From the contractor’s perspective, there is quite a bit of reputational damage that can occur if that becomes a common occurrence.”
Major financial impacts are also possible when a business’s operations are disrupted due to a construction incident. Damage to equipment — such as the candy store’s freezer in the Salem incident — can force a business to shut down temporarily. Business Interruption Coverage, typically included in a business’s Commercial Property Insurance policy, can help offset lost revenue during closures.
“If they have stock or contents inside that might have been damaged, and they have to shut the store down while repairs are made for two months, that is two months of money they are not making,” Pommier said.
Coverage gaps and risk management in high-risk operations
Even when insurance is in place, coverage gaps and exclusions can leave both contractors and business owners at risk for uninsured losses, Pommier said. “When you are doing demolition work, that is a pretty high-risk exposure,” he said. “Mistakes happen, and that is why you have insurance.”
When you are doing demolition work, that is a pretty high-risk exposure. Mistakes happen, and that is why you have insurance.
Demolition work often involves risks that may require additional policies or endorsements, in addition to strict risk management protocols such as hiring qualified subcontractors and verifying their insurance coverage. “We frequently have claims where the subcontractor did not have insurance and the general contractor never checked,” Menanno said.
We frequently have claims where the subcontractor did not have insurance and the general contractor never checked.
One commonly overlooked risk is pollution, which is often excluded from standard CGL Insurance policies. “There are a lot of pollution claims,” she said. “That is something where you can get an endorsement or a Contractors Pollution Liability (CPL) Insurance policy.”
According to Pommier, business owners may not realize pollution is typically excluded on CGL Insurance policies and requires separate Environmental Insurance. “If you have an asbestos loss, that could lead to a pollution claim that is not covered,” he said. “It is worth looking into and making sure you have the right policy, not just the cheapest one.”
Construction firms should also consider protection against claims tied to errors in professional services. This can be obtained through a Contractors Errors & Omissions Endorsement on a CGL Insurance policy or a separate Architects and Engineers Errors & Omissions (E&O) Insurance policy, Menanno said. “If a mistake occurs that falls under Professional Liability, it is important to have that coverage,” she said.
Policy structure can also influence how a claim unfolds. “One form can change the entire outcome of a policy,” Pommier added. “Partner with a broker, agent, or wholesaler who has specialty experience in construction.”
