July 2013 Intro Page

Dec Page

The article of the month deals with the failure to supply exclusion. Both private and public companies that are service providers, such as water companies and gas dealers, are likely to find a failure to supply exclusion on their primary and umbrella/excess liability policies. The purpose of the failure to supply exclusion is, in general, to preclude coverage for injury or damage arising out of the failure to adequately supply gas, water, oil, electricity, steam, or biofuel. The article offers a discussion of the exclusion and provides case law on the subject, along with information about the exclusion and its effect on general liability and umbrella liability policies.

The court cases in the Dec Page discuss several topics. A case from the U.S. District Court for the Northern District Court of Ohio analyzes the meaning of a wrongful act as defined in a professional liability policy and whether a breach of contract claim fits into that meaning. A voluntary payment made by the insured without consulting the insurer is the subject matter for a case from the Seventh Circuit Court of Appeals. The named insured voluntarily paid for repairs to a home damaged by a subcontractor of the named insured and then sought coverage from its insurer. Naturally, the insurer objected based on the voluntary payment provision in the conditions section of the liability policy. The relationship between the separation of insureds clause and coverage for additional insureds is discussed by the Illinois Court of Appeals. An exclusion applied to the named insured, but did it also apply to the additional insured? The final case comes from the Supreme Court, Appellate Division, New York, and deals with the notice of disclaimer and the party to whom state law requires such notice to be sent when the insurer declines coverage for a claim against the insured.

Questions and Answers

Does the abuse or molestation exclusion, CG 21 46, apply when a resident of a high rise condominium goes up to the roof with a security guard and is sexually abused by the guard? See Abuse or Molestation Exclusion Explained.Who is obligated to notify the certificate holder of a policy cancellation? See Certificate of Insurance and Notice of Policy Cancellation. Are rental charges for a crane considered property damage as defined in the CGL form? See Crane Rental Charges not Considered Property Damage.

Is the employer of the named insured on a PAP automatically included as an additional insured when the named insured is using his own car on company business? See Employer as an Additional Insured. Is odor considered property damage under the CGL form? See Odor as Property Damage.

Building Versus Structure

Property, liability, inland marine, and other insurance forms, both commercial and personal lines, contain the terms “building” and “structure” without defining either term. As a result, whether an insured has coverage for its loss to property often cannot be determined until a court decides the issue. If a building is a structure but not all structures are buildings, what might be a better way to prepare coverage forms so that the policyholders do not get a rude awakening after a loss occurs?

The article delves into some of the court cases differentiating between the two terms and offers examples of different things considered to be either a building or a structure. See Building Versus Structure.

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