What is the term for property that is defective due to the insured's deficient additions or work?

• A. Faulty Property
• B. Impaired Property
• C. Damaged Property
• D. Underserved Property

Answer: (B)

The correct term for property that is defective due to the insured's deficient additions or work is "Impaired Property." This designation refers specifically to property that has been made less useful or less valuable because the insured's work or modifications failed to meet the necessary standards or expectations. In many insurance contexts, especially in commercial general liability policies, "impaired property" is defined to indicate that although the property itself is intact, it is deemed less effective or valuable because of the insured’s poor workmanship or incorrect installations.

Understanding this term is crucial in the context of liability insurance because it frames the insurer's responsibilities. If a contractor performs subpar work, the property may remain physically undamaged; however, the economic utility of that property decreases, leading to potential claims for damages. This contrasts with simply "faulty property," which does not distinctly capture the nuances of how the property became impaired as a result of the insured's actions. Other terms like "damaged property" and "underserved property" do not accurately represent the situation where the property's condition stems specifically from the insured's actions leading to a diminished capacity or usefulness.