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“Courts Cannot Agree Whether They Are Covered and If Not, Why?”

On November 15, 2008 by Schnader

Jonathan Stern, a partner in Schnader’s Washington, DC office, authored an article, “Courts Cannot Agree Whether They Are Covered and If Not, Why,” which was published in the Fall 2008 edition of the Defense Research Institute’s In-House Defense Quarterly.

When a malfunctioning object has been defectively constructed or manufactured by a company with a commercial general liability (CGL) policy, questions often arise as to whether that policy covers harm to people or damage to property, and if so, to what extent. Courts in the United States have applied the same or substantially similar CGL policy language to similar fact patterns and have reached remarkably different conclusions. The article examines three issues that opinions on CGL coverage for defective work or defective products have centered on: (1) whether the harm results from an occurrence; (2) whether the harm constitutes property damage; and (3) whether one or more of the CGL’s business risk exclusions applies.