A W.R. Berkley unit is not obligated to indemnify a contractor for a subcontractor’s deficient work, a federal appeals court said Friday, in affirming a lower court’s ruling.

Rockledge, Florida-based Tricon Development of Brevard Inc., a general contractor, hired a subcontractor to fabricate and install metal railings for a condominium project, according to the ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in Tricon Development of Brevard, Inc. v. Nautilus Insurance Co.

The subcontractor was insured by Nautilus, a W.R. Berkley excess and surplus lines insurance unit, through two commercial general liability insurance policies, and added Tricon as an additional insured, the ruling said.

Some of the fabricated railings had defects and damage, were not installed properly and did not meet the project’s specifications, the ruling said. Tricon agreed to pay the cost of removing the railings and fabricating and installing new ones. It then sought indemnification from Nautilus, which the insurer denied.

Tricon filed suit against the insurer in U.S. District Court in Orlando, which ruled in the insurer’s favor. The ruling was affirmed by unanimous three-judge appeals court panel.

“The policies at issue in this appeal are post-1986 standard form commercial general liability policies with products-completed operations hazard covered, which are governed by Florida law.

“We have held that such policies do not cover the costs of replacing defective products,” the ruling said.

Under these policies, property damage is defined as a physical injury to tangible property or the loss of use of tangible property that is not physically injured, it said.

Here, Tricon “does not allege that the subcontractor’s faulty workmanship damaged otherwise non-defective components of the project,” the ruling said.

“Thus, the costs that Tricon incurred in removing the subcontractor’s railings and the fabrication and installation of new rulings do not constitute ‘property damage’ under the policies,” the ruling said, in affirming the lower court’s ruling.

Attorneys in the case did not respond to requests for comment.

In May, a federal appeals court affirmed a lower court ruling in Nautilus’ favor in a coverage dispute with a developer in which the insurer said there was no claim under its property policy because nothing unintended had occurred.