Completed Operations Liability — Coverage Territory Limits

Q

What are the territorial limitations in a commercial general liability (CGL) coverage form with respect to completed operations? The definition of “coverage territory” has it that coverage applies in “all parts of the world if the injury or damage arises out of goods or products….” Does this wording include completed operations?

It is probably very seldom that a problem could arise over this issue, but we have an example to consider. If a customer brings his plane to our insured in Delaware for engine repair and this customer crashes in Mexico because of faulty work on the engine, has the incident taken place in the coverage territory under the CGL form?

Delaware Subscriber

A

It may be that the drafters of the policy language did not include the words “completed operations” in the coverage territory definition because most operations, unlike products, are tied to a place. For example, if the site of the ongoing operations is in the United States, then usually, the United States will be the site of any completed operations exposure. Of course, as your example suggests, this is not always true of operations that involve alteration or repair of chattels.

Whenever an extra-territorial exposure like this one exists, the definition of coverage territory has to be amended to extend 4c 1(a) to add the word “handled” so that coverage applies to “goods or products made, sold, or handled by you in the (coverage) territory….”

This premium content is locked for FC&S Coverage Interpretation Subscribers

Enjoy unlimited access to the trusted solution for successful interpretation and analyses of complex insurance policies.

  • Quality content from industry experts with over 60 years insurance experience, combined
  • Customizable alerts of changes in relevant policies and trends
  • Search and navigate Q&As to find answers to your specific questions
  • Filter by article, discussion, analysis and more to find the exact information you’re looking for
  • Continually updated to bring you the latest reports, trending topics, and coverage analysis