Scottsdale Insurance wants out of a construction defect claim, alleging its insured agreed to repairs without asking permission first.
In a filing made on January 21, 2026, in the United States District Court for the District of Wyoming, Scottsdale Insurance Company is seeking a judicial declaration that it has no obligation to defend or indemnify Matarozzi Pelsinger Builders, Inc. in a lawsuit brought by homeowners over faulty insulation work at a Wyoming residence. The insurer is also asking the court to order reimbursement of defense costs it has already spent.
The dispute traces back to a residential construction project in Jackson, Teton County, Wyoming. Jeffrey and Wendy Safchik contracted with the California-based builder in May 2019 to construct a new single-family residence and guest house within the Solitude subdivision. The home received its Certificate of Occupancy in September 2021.
Trouble surfaced a few months later. According to court filings, warped and cupped soffits were discovered in January 2022. The builder and its insulation subcontractor, Absolute Foam Insulation Systems, Inc., inspected the damage and traced the problem to defective insulation work. An April 2022 engineering report confirmed the issue, pointing to air barrier discontinuities caused by improper installation.
Here is where it gets interesting for coverage purposes.
Scottsdale contends that neither the builder nor the subcontractor told the homeowners that insulation problems might exist elsewhere in the structure. It was not until inspections conducted between March and September 2024 that the full extent of the defects came to light. By then, the conclusion was clear: the insulation throughout the interstitial space needed to be ripped out and replaced.
The insurer is pressing several arguments to avoid coverage. First, Scottsdale asserts the builder knew about property damage before the first policy even took effect in July 2021, since construction was already underway by May 2019. Under the policy terms, if the insured knew damage had occurred before the policy period, any continuation of that damage is deemed pre-existing and falls outside coverage.
Second, and perhaps more notable for industry observers, Scottsdale alleges the builder agreed to undertake repairs without obtaining the insurer's consent. The policy explicitly states that no insured may voluntarily assume any obligation without prior approval. Scottsdale argues this breach could void coverage entirely.
The insurer is also invoking standard exclusions for continuing or ongoing damage, damage to the insured's own work, and damage to impaired property.
No final determination has been made, and the allegations remain untested in court. But the case offers a timely reminder for contractors and insurers alike: when defects surface, how an insured responds in those early days can make or break coverage down the line. Agreeing to fix the problem may seem like the right call, but doing so without looping in the insurer could leave a policyholder holding the bag.
