Does bad advice constitute an 'occurrence' in a BOP policy?

Coverage Q&A: An installer believed an appliance was in good condition, but it later caused damage to a home.

This week’s Coverage Q&A deals with an installer’s instructions to a homeowner regarding the need for a replacement appliance and a claim for damages caused by the older appliance. (Photo: Ivan Kruk/Shutterstock)

Every claim is different, and some insurance policies can be difficult to interpret for unique situations. FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry, makes it simple to find credible answers to your complicated coverage questions. Analysis brought to you by our FC&S experts. 

Editor’s Note: Rarely does an installer suggest that a customer doesn’t need a new appliance recently purchased. But that is what happened in our Coverage Q&A this week, potentially triggering a claim.

Question: Our insured installs water heaters purchased at Lowes and is covered under a buisnessowners package policy. One day, our insured’s employee arrived at the home to install a water heater at the claimant’s residence. The employee informed the claimant that her current water heater was in good working condition and offered to return the new water heater to Lowes and get her a refund. The claimant agreed. However, the claimant then hired a plumber to inspect her water heater, who said the water heater was the issue — contrary to the employee’s assessment. 

The current water heater then caused water damage to the home, so now she and her insurer are making a claim against our insured. 

Our insured did not affirmatively do anything at the claimant’s property, but they did not do what they were hired to do and arguably gave the claimant bad advice. Does this constitute an occurrence as to trigger coverage under the policy? Are there any other provisions in the BOP that might preclude coverage?

— Ohio Subscriber 

Analysis: The purchaser took the installer’s advice and returned their newly purchased water heater. Unfortunately, the existing water heater caused damage within a couple of days, but does this constitute an ‘occurrence‘ needed to trigger the insured’s policy?

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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