The sprinkler system's piping froze and broke. The escaping water destroyed the gym floor beneath it. Brotherhood Mutual paid the loss and then sued Michiana Contracting that had installed the sprinkler system as part of its contract to build Plymouth Wesleyan's entire gym, student center, and classroom expansion.

The contract between Michiana and Plymouth Wesleyan included a mutual waiver of subrogation for all work that Michiana performed. However, Brotherhood argued that the waiver did not apply to the damage to the gym's flooring because the members of Plymouth installed the flooring. Click here to learn how the court ruled.

Michiana Contracting had a problem. Because the courts were against it, Michiana expected its CGL carrier Brotherhood to respond on its behalf. Most CGL policies cover property damage caused by the named insured's completed operations, subject to the policy exclusions. The important exclusions to the carrier will consider in this case are:

• j. Damage To Property
• l. Damage To Your Work

Click here to review an article about contractors and products-completed operations coverage in the Insurance Services Office (ISO) Commercial General Liability Coverage Form to see how Michiana's carrier might respond.

Michiana contracted to build a large addition onto the Plymouth Wesleyan Church. It may have operated as a general contractor for the entire job and subcontracted some or all of the construction to other contractors. The construction industry appears to be coming back and now might be a good time to consider adding that industry to your agency’s prospect list.

The How to Insure General Contractors course would be a good start to familiarize your staff with this exposure.

Click here for instructions in signing up for your "How to Insure" course.

The commercial lines questionnaire is an excellent tool to use to develop information about a potential customer. The client will appreciate that you ask important questions specific to his or her industry that can uncover gaps in coverage. This valuable information then allows you to work with an insurance company to develop appropriate coverage and pricing.

Click here for wording you could use to approach a contractor prospect.