Costs and Fees as Property Damage

February 9, 2015

Our insured is a commercial painter. He was contracted to strip old paint off a building and repaint the building. The insured was using a heat gun to strip the old paint off the building.

The heat gun caused a piece of wood to catch fire, and a large section of the building caught fire.

There were five fire departments dispatched to respond to suppress the fire.

The township where the fire occurred has submitted a bill to our insured for the costs and fees associated with fighting and suppressing the fire.

Can the costs and fees associated with fighting and suppressing the fire be considered damages as defined by the general liability policy?

Pennsylvania Subscriber

It is true that costs and fees do not fit under the definition of property damage. But, the CGL insuring agreement applies to damages because of BI or PD. So, if costs and fees are charged to the insured and he is legally obligated to pay those due to his negligence and if the costs and fees arise due to the BI or PD caused by the insured, then the policy will pay those costs and fees. All damages flowing as a consequence of BI or PD would be encompassed by the insurer's promise to pay, subject of course to any applicable exclusions or conditions.

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