ISO COMMERCIAL GENERAL LIABILITY COVERAGE FORMS ANALYSIS

j. Damage To Property

The insurance company does not pay for property damage to:

(1). Property the named insured owns, rents or occupies. This includes costs or expenses incurred by the named insured or any other party to repair, replace, enhance, restore or maintain such property for any reason, including costs to prevent injury to persons or damage to property of others;

(2). Premises sold, given away or abandoned by the named insured if the property damage arises out of any part of those premises;

(3). Property loaned to the named insured;

(4). Personal property in the insured's care, custody or control;

Examples: Property in the insured's care, custody and control includes:

VCR's of customers left with a VCR repair operation for cleaning, service or repair

Fur coats left by customers with a retail fur shop that also offers fur cleaning and storage facilities to its customers

(5). The specific part of real property being worked on by the named insured or others on its behalf for the property damage that arises out of those operations; or

(6). The specific part of any property requiring restoration, repair or replacement because the named insured's work was done incorrectly.

Example: An insured is installing a new roof on a portion of a building and erroneously removes shingles from a portion of the roof not needing repairs. The CGL policy does not cover the damage or expense to re-cover that portion of the roof.

Notes:

Paragraphs (1), (3) and (4) above do not apply to property damage, other than by fire, to a location, including its contents, rented to the named insured for seven or fewer consecutive days. A separate limit applies as described in Section III–Limits Of Insurance.

Paragraph (2) above does not apply if the location is the named insured's work and the named insured never occupied or rented the location or held it for rent. This is particularly important to homebuilders that build and sell homes. Without this exception to the exclusion, there would be no coverage once the home was sold. However, this exclusion does apply if the named insured ever used the home as a model home.

Paragraphs (3), (4), (5) and (6) above do not apply to any liability assumed under a sidetrack agreement.

Example: Appliances Unlimited distributes large appliances. Since a railroad track passes next to its premises, Appliances feels sales would increase and expenses decrease if the railroad built a sidetrack into its warehousing area. That way, merchandise could be loaded and unloaded directly into and out of railroad cars. The railroad agrees to the arrangement on the condition that it has 24-hour access to the sidetrack. It also requires a guarantee that Appliances will protect the track from vehicle damage, limit vehicle access and hold the railroad harmless for any collision or injury during loading and unloading.

Note: Railroad sidetrack agreements are covered contracts under the CGL coverage form.

Paragraph (6) above does not apply to property damage included in the products/completed operations hazard.

Please refer to PF&M Section 270_C061, Property Damage Exclusion Held Applicable To Entire Renovation Area, in Court Cases, for an illustration of the Damage To Property exclusion. Please refer to PF&M Section 270.6-1, Care, Custody or Control, for a detailed analysis of this exclusion.

The ISO CGL coverage form does not have an endorsement available to cover property of others in the insured’s care, custody or control but some insurers have developed their own versions of this endorsement. Another alternative is Inland Marine Insurance. Bailees Coverage is available to cover the property of customers or clients of the insured. Various forms of bailees coverage is available through ISO, the American Association of Insurance Services (AAIS) and company-specific forms, depending on the needs and operations of the insured. Please refer to PF&M Section 142.2, AAIS Bailee Customers Floater Coverage Form, and PF&M Section 145.4, ISO Bailees Customers Coverage Form, for more information on these forms and insuring property of others in the insured's possession.

For insurers and brokers needing to provide coverage for a variety of difficult, unusual or specialty property situations, refer to Bailees Customers Insurance in The Insurance Marketplace, a publication of The Rough Notes Company, Inc.

k. Damage To Your Product

Coverage does not apply to property damage to the named insured's product arising out of it or any part of it.

Example: The named insured manufactures gas furnaces. A furnace malfunctions, catches fire and destroys the furnace. Coverage does not apply to the destroyed furnace.

For agents and brokers having accounts with a variety of difficult, unusual or specialty product situations, refer to Products Liability in The Insurance Marketplace, a publication of The Rough Notes Company, Inc.

l. Damage To Your Work

There is no coverage for property damage to the named insured's work that arises out of it or any part of it included in the products/completed operations hazard.

Note: This exclusion does not apply if a subcontractor did the work on behalf of the named insured.

Example: The named insured incorrectly repairs the electrical wiring in a building that causes a fire. The property damage as a result of the fire is not covered. However, coverage does apply if a subcontractor did the incorrect wiring repair work for the insured.

Please refer to PF&M Section 270_C080, Work Product Exclusion In Contractor's Liability Insurance Held Applicable To Claim For Negligent Location Of House, in Court Cases, and PF&M Section 270_C081, Work Project Exclusion Held Applicable To Control Of Project By Construction Manager, in Court Cases, for two court cases involving this exclusion.

m. Damage To Impaired Property Or Property Not Physically Injured

The insurance company does not cover property damage to impaired property, or property not physically injured, caused by or arising out of either a defect, inadequacy or dangerous condition in the work performed by the contractor for the named insured or a delay or failure by the named insured or by anyone acting on behalf of the named insured for the performance of the terms of a contract or agreement. However, this exclusion does not apply to the loss of use of other property arising out of the sudden and accidental physical injury to work performed by the contractor for the named insured.

Example: The insured manufactures switches that start and stop a variety of products. A batch of defective switches was sold to other manufacturers that incorporated them into their products. When these switches were installed, the other products would not operate. The other manufacturers’ products were impaired because of the insured’s defective product, but otherwise undamaged. This loss is excluded.

Example: The insured agrees to have the artwork for a client's brochure completed by a specific date. When the date arrives and the artwork is not complete, there is no physical injury to any property but the client loses potential income by being unable to distribute the brochure. This loss is also excluded.

Note: There is no standard ISO endorsement currently available to buy back this coverage or to delete this exclusion.

For insurers and brokers needing to provide coverage for a variety of difficult, unusual or specialty products situations, refer to the section for Products Liability in The Insurance Marketplace, a publication of The Rough Notes Company, Inc.