“Your Product” Defined

September 1, 2014

Our agency insures a plumbing concern in Michigan. They installed a new sump pump that was faulty and resulted in the claimant's basement flooding and causing extensive damage. The insurer for the plumbing company is denying coverage on the basis that there was no negligence on the part of their insured, the plumbing company. They stated that the pump itself was faulty, not the installation. Therefore, they contend that the claimant must look to the pump manufacturer for restitution, not the plumbing company. In FC&S I came across an article from 4/5/10 citing a court case in Nebraska. The case was Chief vs. Great Northern Ins. Co. and the court ruled that “your product” included products manufactured, sold, handled, or distributed by the named insured. The plumbing concern clearly sold and handled the faulty pump. Since it was (by this court's definition) their product, wouldn't the GL carrier for the plumbing concern have to pay for the resulting property damage? This was a Nebraska case so I'm not certain it would apply in MI.