That's actual damage to property. I would hope it is covered.
Getting sued for a defective install in itself, I do not believe I am covered.
The insurance industry wont screw the mortgage provider or bank the way property owners get screwed.
If the mortgage was not paid off, before an un-insurable event destroyed property, or casualty verdict takes the property, all industry players are made whole, except the property-owner victim who takes one for the team.
Banks are experts at monetizing collateral if a victim of lost property stops loan payments. Regardless of living in their car, or under a bridge, wages & investments are garnished, and collateral assets are confiscated.
Not sure what property insurance covers earthquake, flood, lightning, hurricane, terrorism, tornado, or acts of War, much less covers fire marshal reports of missing / expired smokes, or other defects that increased hazards, after policies are signed.
However, other public policy remedies may exist. If not de-funded, FEMA relief for declared disaster areas only took 10+ years to pay off claims after hurricane Katrina. If a state-license board exists it may attach a contractor bond, or GL policy, for some damages from construction defects. Small claims may recover limited amounts for other unlicensed contractors willing to appear.
Whatever happens the economy will survive, thanks to property owners who pay their taxes, and sacrifice themselves to keep everybody else profitable.
