Our insured was hired to repair a chiller for a large hotel. He removed the motor to make repairs. Unfortunately he mixed the two wires, causing the machine to work backwards, thereby blowing the entire unit.

This is from the insured's statement: 

What were your hired to do: Pull the machine down and replace the burnt out motor.

What happened: We pulled the motor off the machine and had it rewound. My mechanic started the machine backward. This caused the impellers, the gears and bearings to get torn up. We ordered a new gear, new impellers, and new materials that we needed to put it back together. We cranked it back up, and this time it tore up the impellers, gears, and bearings. 

We went to fire it up again, and I didn't want to take any chance and I had the factory come in and check all the clearance. It was backward, and we flipped it around and we got it up and running. 

During this time it was a critical issue. We paid for a temporary chiller, which would have prevented the hotel from losing any business.

The rotation on the motor was wrong. The rotation was started backward, and because of the speed of these things, it just tears up everything. 

These things turn at 18000 rpm; if anything is wrong at all, it will tear up other parts. 

Our agent believes that the motor was the policyholder's work, therefore the remainder of the damage was resulting damage. It is our position, however, that once he hooked the motor up to the gears in the unit, the entire unit became his work. We do not believe there is coverage for this loss, but we would appreciate your input.

Ohio Subscriber

There probably is no coverage for this loss, but there are some caveats.

It is unclear whether the chiller is installed or not. If it is installed, it is real property. If it is movable, it is personal property. Regardless of either, this is not a completed operations claim but, rather, an operations claim.

If the chiller is real property, look at exclusion j (5), property damage to that particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the “property damage” arises out of those operations; OR j (6) that particular part of any property that must be restored, repaired or replaced because “your work” was incorrectly performed on it. Although the original job was to replace a burnt out motor, the insured actually rewound the motor, reconnected it, and started it up. There was an error in this ongoing operation, which caused the property damage.

If the chiller is personal property, look at exclusion j (6) again, because it pertains to “any property,” and j (4), which excludes property damage to personal property in the care, custody, or control of the insured. The question with j (4) revolves around the term “the insured,” which is interpreted as “the insured” who had custody of (was working on the project) and not the named insured. But even if that voids the application of j(4) to this situation, j(6) would still apply.

It must be said, however, that different courts have interpreted “that particular part” of real property and “care, custody, or control” in different ways, so there always is the chance that a court would reason that either of those terms are not met in this situation.