In  Allied Prop. & Cas. Ins. Co. v. Metro N. Condo. Ass’n., Allied’s policyholder insured improperly installed windows on Metro’s property. Metro sued the insured for breach of the implied warranty of habitability. Metro and the insured entered into a settlement agreement assigning Metro the right to the insured’s insurance proceeds.

Allied sought a declaratory judgment that it was not required to cover the settlement because the policy excluded the cost of repairing the insured’s defective work and contractual damages. The trial court agreed, finding construction defects were not covered, and the Seventh Circuit affirmed.

Breach of the implied warranty of habitability claims are contractual and not covered under the policy. Allied was only liable for damages stemming from a covered claim. The settlement damages were not covered under the policy, thus Allied had no duty to indemnify its insured.

Metro also lacked standing to sue on behalf of individual condo owners for personal property damage because each owner’s property was affected differently and the damage was not to the common elements.