Would coverage be available to defend this suit?

South Carolina Subscriber

A

The businessowners liability form promises coverage for suits alleging bodily injury or property damage arising from an occurrence in the coverage territory during the policy period.  Property damage includes loss of use claims.  The only exceptions are claims arising out of occurrences that are excluded in the form.

There are three exclusions in the form that might pertain. Professional services exclusion (j) eliminates coverage for claims arising out of the “rendering or failure to render” professional service.  The examples of professional service that this exclusion encompasses are given as legal, accounting, or advertising services, architectural services, engineering services, medical services, cosmetic or tonsorial service, optometry or optical or hearing aid service, ear piercing and pharmacy.  The ejusdem generis rule would have it that supplying goods to order is not a “professional service” within the context of those enumerated services.

Exclusion (n) is the “impaired property” exclusion and relates to loss of use of property after it has been discovered that there is a “defect, deficiency, inadequacy, or dangerous condition” in the insured's product or work.  The wiring may have been unsuitable for the particular application but it contains no “inadequacy” in the sense of it being defective or dangerous or even deficient (in terms of what it was supposed to be).

Exclusion (o) addresses the issue of loss of use because of a withdrawal from market of the insured's property because of a known or suspected (again) “defect, deficiency, inadequacy, or dangerous condition.”  Again, the wiring was unsuitable for this particular application but it has not been alleged to be inadequate in and of itself.

Though this seems like a frivolous lawsuit, the form does not exclude frivolous lawsuits.  The policy should provide defense and, if necessary, coverage.