A Difficult Question to Answer: What Actually Is Its Purpose?

 January 15, 2013

Summary: The reality of the matter is that the “impaired property” exclusion has had a troublesome path since its birth in 1966. The reason it is confusing to many people is that its purpose is generally misunderstood. It is supposed to apply when a claim does not involve physical injury to tangible property. However, whenever a claim involves property damage stemming from a named insured's product, the “impaired property” exclusion also is commonly cited by many insurers. As a result, there is no majority or minority standing concerning this exclusion, and it has to be taken into consideration just like other exclusions.