Impact of the cross suits exclusion

Coverage Q&A: What exposure remains when an insurance policy has an inter-company products exclusion?

The cross suits exclusion would exclude liability suits involving one named insured against another named insured. (Photo: Shutterstock)

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Editor’s Note: This week’s Q&A addresses the impact of the cross suits exclusion in excluding all inter-company suits.

Question: I have a question based on an audit. ISO excludes inter-company sales from products/completed operations if the policy has an inter-company products exclusion. What about the entire exposure if the policy has a cross suit exclusion? What exposure remains?

— New York Subscriber

Analysis: When an insured has multiple operations, subsidiaries, or other inter-related entities but wants to insure all of their businesses under one liability policy, it is possible that there could be claims involving more than one insured. For example, a manufacturer may have subsidiaries that assemble a complete product and subsidiaries that create the parts used in the product. The assembly of the product could be with yet another subsidiary. The product might even be sold under two or more separate subsidiary names. If a suit is brought, it might name all of the subsidiaries in the suit. This would be an example of cross liability. The separation of insurance clause treats each subsidiary named on the policy as if they had their own policy. But what happens if the insured doesn’t want to provide coverage in that manner?

Answer: To learn the answer to this week’s coverage Q&A, please log into your FC&S Expert Coverage Interpretation account.

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