Heffernan Law Group

Devon Thurtle Anderson Named 2013 Rising Star

2013-06-14T07:00:00.000-07:00

We are pleased to announce that Devon Thurtle Anderson has again been named to the Washington
Rising Stars list as one of the top up-and-coming attorneys in Washington State for 2013. Each year, no more than 2.5 percent of the lawyers in the state receive this honor.

The selection for this respected list is made by the research team at Super Lawyers. Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a rigorous, multi-phased process that includes a statewide survey of lawyers, an independent research evaluation of candidates, and peer reviews by practice area. The Rising Stars lists are published nationwide in Super Lawyers magazines and in leading city and regional magazines across the country.

For more information about Super Lawyers, visit superlawyers.com.

Houston General Awarded $2.8 Million In Contribution Claim

2013-04-18T14:02:00.000-07:00

After winning a favorable jury verdict, Houston General was recently awarded $2.88 million in its contribution claim against St. Paul Fire & Marine.

The claim arose after Houston paid its insured, Lakewest, $6 million for damage at the insured property. Another of Lakewest's insurers, St. Paul, did not contribute to the settlement. So, Houston sued St. Paul for contribution. The trial was conducted in two phases. First, a jury determined that coverage existed under three of the St. Paul policies at issue. Then, the court determined St. Paul's share of the loss, and held that St. Paul was liable to Houston for $2.88 million in contribution.

The court's complete Findings of Fact and Conclusions of Law are available here.

Recovery of Defense Costs When Defending Under a Reservation of Rights

2013-04-01T17:24:00.000-07:00

The Washington State Supreme Court was recently presented with the issue of whether an insurer may unilaterally condition a reservation of rights defense on the insured absorbing defense costs if it is ultimately determined there is no duty to defend. National Surety Corp. v. Immunex Corp., No. 86535-3 (March 7, 2013). In holding that insurers may not unilaterally require recoupment of defense costs upon a finding that no duty to defend was owed, the Court affirmed its prior decisions setting the standard for an insurer’s duty to defend.

The Court first reviewed the insurer’s duty to defend, and observed that insurance contracts are imbued with public policy concerns. As a result of these public policy concerns, insurers have a good faith duty to fulfill their contractual obligations. An insurer’s good faith duty includes a duty to defend and a duty to indemnify its insured. The duty to defend is broader than the duty to indemnify and arises if any reasonable interpretation of the facts or law could result in coverage. If there is a question of whether a claim is covered, an insurer can choose to defend its insured under a reservation of rights while seeking a declaratory judgment to determine if such a duty exists.

An insurer defending under a reservation of rights benefits by protecting itself from findings of breach, waiver, bad faith, and coverage by estoppel. Allowing an insurer the benefits of defending under a reservation of rights, and also allowing recoupment of defense costs if a loss is ultimately not covered, would only serve to protect the insurer. According to the Court, such a scenario would leave the insured with no greater benefit than if the insurer had initially refused to defend, which would be contrary to the longstanding view that the duty to defend is broader than the duty to indemnify. Because of this broad duty to defend, when an insurer chooses to receive the benefits of defending a claim under a reservation of rights, it cannot recover defense costs if it is later determined that no duty to defend was owed.

Heffernan Law Group Wins Jury Verdict In Collapse Case

2013-03-29T14:23:00.001-07:00

On Thursday afternoon, the jury returned their verdict in the case Houston General Insurance Co. v. St. Paul Fire & Marine. After a three-day trial, the jury found that "collapse," defined as "substantial impairment of structural integrity" (or SSI for short), occurred during three of St. Paul's policy periods: 1997-98; 1998-99; and 1999-2000. In order to recover on its claim for contribution, the plaintiff Houston General only had to prove that collapse occurred during one of the St. Paul policy periods.

Heffernan Law Group represented Houston General at trial, which was in US District Court before the Honorable Marsha J. Pechman.

"Collapse" Means SSI

2013-03-22T12:36:00.000-07:00

Many insurance policies provide coverage for "collapse." Some policies expressly define "collapse" as an actual caving in or falling down. But if there is no definition, what does the term "collapse" in an insurance policy mean?

SSI caused by hidden decay in a structural beam at the Lakewest
Condominiums on Westlake Avenue in Seattle, Washington

Chief Justice of the U.S. District Court for the Western District of Washington, the Honorable Marsha J. Pechman, recently ruled that, under Washington law, the undefined term "collapse" in an insurance policy means "substantial impairment of structural integrity" (or "SSI" for short). In other words, a building does not need to actually fall down – or even be in imminent danger of doing so – for a property insurance policy’s collapse coverage to apply, so long as the policy itself does not specify a different definition of "collapse."

Although this definition of "collapse" has long been accepted in Washington, a handful of recent litigations have sought to call this into question. In one such case, Judge Zilly, also of the U.S. District Court for the Western District of Washington, cited the two-justice dissent in Sprague v. Safeco for the proposition that Washington would adopt a stricter “imminent collapse” standard, rather than SSI. Acknowledging Judge Zilly’s holding in Queen Anne, Judge Pechman noted that the dissent Judge Zilly relied upon was signed by only two Washington Supreme Court justices, and that “two justices do not a majority make.” Instead, Judge Pechman pointed out that “twice as many justices joined the dissenting opinion in Sprague, which reiterated the consistent holding of Washington Courts that collapse means SSI.” Judge Pechman's complete opinion in the case, Houston General Insurance Company v. St. Paul Fire & Marine, can be found here.

This isn’t the last that Washington jurisprudence is likely to see on this issue, as it is currently pending appeal in both state court and the Ninth Circuit.

Federal Court Holds SSI Backdating Satisfies Daubert Standard

2012-11-01T14:16:00.000-07:00

A handful of recent cases have sought to question whether an expert may testify as to the date substantial structural impairment, also called "SSI," commenced for purposes of determining property insurance coverage. In a recent ruling in Houston General Insurance Co. v. St. Paul Fire & Marine Insurance Co., USDC Case No. C11-2093MJP, Judge Pechman held that expert "backdating" of SSI is admissible, and that it satisfies the standard for expert testimony set forth in the seminal case Daubert v. Merrell Dow Pharmaceuticals.

A complete copy of the Order is available here.

Houston General Insurance Company is represented by Heffernan Law Group in the litigation. The backdating model was prepared by Houston's experts, Lee Dunham P.E. of OAC Services, Inc. and Dr. Robert Edmonds, a wood decay pathologist at the School of Forest Resources at the University of Washington.

Devon Thurtle Anderson Named 2012 Rising Star Attorney by Super Lawyers

2012-06-13T07:21:00.001-07:00

Devon Thurtle Anderson has been named to the Washington Rising Stars list as one of the top up-and-coming attorneys in Washington State for 2012. Each year, no more than 2.5 percent of the lawyers in the state receive this honor.

The selection for this respected list is made by the research team at Super Lawyers. Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a rigorous, multi-phased process that includes a statewide survey of lawyers, an independent research evaluation of candidates, and peer reviews by practice area. The Rising Stars lists are published nationwide in Super Lawyers magazines and in leading city and regional magazines across the country.

For more information about Super Lawyers, visit superlawyers.com.

Eastwood and Affiliated FM Applied

2011-08-02T15:18:00.000-07:00

The Washington Court of Appeals recently had an opportunity to apply the Supreme Court opinions in Eastwood v. Horse Harbor Foundation, Inc., 170 Wn.2d 380, 241 P.3d 1256 (2010) and Affiliated FM Insurance Co. v. LTK Consulting Services, Inc., 170 Wn.2d 442, 243 P.3d 521 (2010). In those cases, the Supreme Court ruled that a professional can be liable in tort (i.e., for negligence) under the “independent duty doctrine.” This is true even if the plaintiff’s damages are economic losses. Prior Washington case law would likely have barred a plaintiff’s economic damages, under the “economic loss rule,” for claims arising in tort.

Now, the independent duty doctrine is taking hold statewide. Last week, in an unpublished decision from the Washington Court of Appeals, the independent duty doctrine was applied to reverse a motion for summary judgment dismissing claims against an engineering firm. In that case, an engineer entered into a contract to perform engineering services for a property owner. The engineering work was allegedly defective, and the owner sued the engineer, asserting claims for breach of contract and for professional negligence. The engineers moved to dismiss the negligence claims, and the trial court granted the motion. This all took place before the Supreme Court issued its recent opinions in Eastwood and Affiliated FM.

On appeal after Eastwood and Affiliated FM, the court held that those new Supreme Court decisions required that summary judgment dismissal be reversed. As paraphrased by the court, “Eastwood and Affiliated…clarify that where there is an independent duty that arises separate from the contract, breach of that duty will be actionable, despite the contract.” Donatelli v. D.R. Strong Consulting Engineers, Inc. at *12.

Although federal courts have been dealing with the Eastwood and Affiliated FM decisions for several months now, this was the Washington State Court of Appeals’ first opportunity to address the new legal landscape adopted by these decisions.

Statute of Limitations for Bad Faith Begins to Run Upon Entry of Final Judgment Against Insured

2011-07-25T17:48:00.000-07:00

On July 5, 2011, the Washington Court of Appeals (Division I) issued its opinion in the case Moratti v. Farmers Insurance Company of Washington, et al. That case held that the statue of limitations against an insurer begins to run when the underlying judgment against the insured becomes final. In Washington, the three-year statute of limitations for torts applies to a bad faith claim against an insurer. In other words, a bad faith claim against an insurer must be filed within three years of the date the claim accrues.

The question addressed in Moratti was when does such a claim accrue. There, Moratti sued her landlord after she was injured in a fire in 2002. Her injuries were due, at least in part, to the fact that the home did not have adequate, working smoke detectors. Moratti sued the landlord in 2003, and the landlord tendered suit to his insurer, Farmers. Farmers accepted defense, and at first reserved only $5,000 to settle the claims, knowing that Moratti's medical expenses alone totaled almost $800,000. Approximately a year later, a new adjustor was assigned to the case, and the landlord was advised for the first time that his liability could exceed his policy limits. Despite this, Farmers offered only $100,000. Finally, in 2004, Farmers offered to tender its policy limits to settle the claim, but this offer was rejected.

Facing significant personal exposure, the landlord confessed judgment for $17 million in 2007. $600,000 of this judgment was paid out of the landlord's own pocket; the rest was as of yet unfunded. In exchange, Moratti agreed not to execute on the judgment against the landlord personally, and took an assignment of the landlord's rights against Farmers. A reasonableness hearing was held, and Farmers appeared but did not contest the judgment amount.

The following year, in 2008, Moratti filed suit against Farmers as the assignee of the landlord's bad faith and CPA claims. After a four-week jury trial, the jury returned a verdict in favor of Moratti. The trial court set aside the jury verdict, holding that the bad faith claim against Farmers was barred by the statute of limitations. Alternatively, the court held that even if the claim was not barred, Farmers was entitled to a new trial.

On appeal, Farmers argued that the bad faith occurred in 2002, when the claim was denied without investigation. Farmers further argued that the claim could not have accrued after 2004, because in 2004 Farmers offered its policy limits, thereby correcting any bad faith.

The Court of Appeals disagreed. An insurer's duties to defend and indemnify "are continuing duties that do not stop merely because the insurer offers the policy limits two years after it left the insured with the belief that there was no liability." Accordingly, the court held that the claims were timely, and not barred by the statute of limitations.

Metadata

2011-03-17T11:19:00.001-07:00

The Supreme Court of Washington recently held in O’Neill v. City of Shoreline, ___Wn.2d___, 240 P.3d 1149 (2010), that metadata is a public record that is subject to disclosure under the Public Records Act (PRA), RCW Chapter 42.56.

At a meeting of the Shoreline City Council in 2006, the city’s Deputy Mayor stated that she received a copy of an email sent by a private citizen, Ms. Hettrick, accusing the Council of improper conduct. The email had been forwarded to the Deputy Mayor and others by another private citizen, Ms. Thwing. In the email, Ms. Hettrick claimed to be sending the email at the request of one Beth O’Neill.

O’Neill denied authoring the email and made a request for the email. The Deputy Mayor agreed to provide the email, and forwarded it to her personal email account, removing the “to” and “from” line to protect Ms. Thwing. The Deputy Mayor then forwarded the email, now in her personal email account, to the City of Shoreline, which then provided Ms. O’Neill with a printed copy.

O’Neill then requested all the metadata pertaining to the email chain. The Deputy Mayor was unable to find the metadata from the original email and determined she has accidentally destroyed it, so she requested that Ms. Thwing resend the original email. The resent email, not the original, was provided to the city for distribution to O’Neill. Councilmember Janet Way also provided the metadata from the original email from Ms. Thwing. O’Neill brought suit under the PRA since the city did not provide the metadata from the original email Thwing sent to the Deputy Mayor.

The Supreme Court affirmed the decision of the Court of Appeals and held that the metadata from Ms. Thwing’s original email to the Deputy Mayor was a public record because it was a “record relating to the conduct of government.” O’Neill, 240 P.3d at 1153. The Court also made clear, however, that metadata must be specifically identified and asked for in a public records request.

How Much Time Does My Insurance Company Have to Pay My Claim?

2011-03-10T08:54:00.000-08:00

In Washington, there are certain laws and regulations in place that prevent an insurer from “sitting on” a claim. In other words, when you submit a claim to your insurer, the insurer must timely complete its investigation and respond to the claim (generally by paying or denying) within certain time periods. This article will outline some important deadlines that insurers must follow.

First, an insurance company is required to “acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.” WAC 284-30-330(2).[1] Specifically, for individual insurance policies, an insurer must acknowledge receipt of a claim within ten working days of receiving the notification of claim. WAC 284-30-360(1). Once an insurer receives a claim, it must “affirm or deny coverage…within a reasonable time” after proper claim documentation is submitted. WAC 284-30-330(5). Sometimes further communication between the insured and the insurer is necessary, in which case the insurer must provide an appropriate reply within ten working days. WAC 284-30-260(3).

In general, an insurer must complete its investigation of a claim within 30 days of receiving notification of the claim. WAC 284-30-370. However, the statute does acknowledge that, in some situations, an insurer’s investigation cannot reasonably be completed within that timeframe. Id. If this is the case, then within 15 working days after receiving fully completed proofs of loss, the insurer must notify the insured whether the claim has been accepted or denied. WAC 284-30-380(1). If the insurer needs more time to determine whether the claim should be accepted or denied, the insurer must notify the insured within 15 working days that more time is needed, and set forth the reasons that additional time is necessary. WAC 284-30-380(3). Going forward, additional notice must be provided every 30 days after that date explaining why the claim remains unresolved. WAC 284-30-380(3). However, the insurer cannot unreasonably delay resolution of the claim.

Once the obligation to pay has been established, the insurer is required to follow standards designed to get payment to the insured within fifteen days of submitting properly executed releases or settlement documents. WAC 284-30-330(16). Moreover, there are certain excuses that an insurer is expressly prohibited from using to avoid paying a claim timely. For example, WAC 284-30-330(6) provides that, where two insurers are potentially liable for a claim, they must pay, even if the insurers haven’t yet determined between themselves which insurer is responsible for what portion of the loss. See also WAC 284-30-380(4) (an insurer cannot refuse to pay a claim on the basis that a third party is primarily responsible, absent specific language in the policy). Similarly, an insurer cannot delay payment by requiring the insured to submit multiple claim reports containing substantially the same information. WAC 284-30-330(11). Likewise, an insurer cannot refuse to pay claims under certain policy coverages in order to influence settlement of claims under other coverage provisions. WAC 284-30-330(12).

An insurer cannot compel its insured to commence litigation to obtain the benefits of its policy. WAC 284-30-330(7). When an insured does have to sue its insurer to obtain coverage and wins, the insured is also entitled to receive not only the amount due under the policy, but also attorney fees incurred in the coverage suit. Olympic Steamship Co., Inc. v. Centennial Ins. Co., 117 Wn.2d 37, 811 P.2d 673 (1991).

In short, Washington regulations are designed to ensure that insurance claims are generally paid out within a month or two. If extenuating circumstances apply, the laws and regulations aim to ensure that insurers continue to communicate with their insureds during any delay, and do not delay claims unreasonably. Failure to follow the time requirements of Washington law could increase an insurer’s liability for a claim. For example, breaches of the time periods set forth above could constitute breaches of Washington’s Consumer Protection Act, which allows treble (triple) damages of up to $10,000, or Washington’s Insurance Fair Conduct Act, which also allows treble damages without any limitation.

[1] To this end, an insurance company must also “adopt and implement reasonable standards for the prompt investigation of [insurance] claims.” WAC 284-30-330(3).

Bushnell v. Medico Insurance Company: Each Renewal Creates A New Policy

2011-03-03T09:02:00.000-08:00

The recent Washington State Court of Appeals decision in Bushnell v. Medico Insurance Company, ___ Wn. App. ___, ___ P.3d ___, 2011 WL 479961 (2011), affirmed a rule established almost 50 years ago in Tebb v. Continental Casualty Co., 72 Wn.2d 710, 712, 430 P.2d 597 (1967), and held that an insurance policy renewal is a new contract, and it incorporates laws enacted after the initial policy was issued.

In Bushnell, the insured purchased a long-term care insurance policy beginning in 1987. The policy was for a period of one year, but was subject to mandatory renewals so long as the insured continued to pay the renewal premium. The insured timely paid the renewal premiums for more than 20 years.
Effective in 1988, the year after the policy was issued, Washington enacted the Long-Term Care Insurance Act, RCW 48.84. Among other things, the Act prohibited long-term care insurance policies from requiring an initial hospital stay as a condition of coverage. The original policy and each of the renewal policies issued by the insurer contained provisions requiring a three-day hospital stay as a condition of coverage.

On February 1, 2007, the insured paid the renewal premium for the period January 1 – February 28, 2007. On February 21, it was determined that the insured had suffered a stroke several months prior and required long-term care. The insured’s attorney-in-fact submitted a claim under the long-term care policy, which the insurer denied because the hospital stay prerequisite was not satisfied.

The Court of Appeals held that the insurer had unreasonably denied coverage. The insurer argued that the Long-Term Insurance Care Act did not apply to the renewals, since the original policy was issued prior to the Act’s effective date. The court disagreed, holding that although the initial policy was issued prior to the effective date of the Act, the renewal policies were all issued after the effective date of the Act; therefore, even though the hospitalization requirement in the initial policy may have been effective, the Act rendered the hospitalization requirement in each of the renewal policies ineffective. In so holding, the court relied on precedent almost 50 years old in Tebb v. Continental Casualty Company, 72 Wn.2d at 712, holding that a renewal of an insurance policy creates a separate and independent contract.

The effects of the rule established in Tebb and followed here in Bushnell will apply to each policy differently, depending on the precise language of the policy at issue. However, policyholders should keep in mind that each insurance policy renewal is a new contract, and not all provisions of the policy necessarily remain enforceable upon renewal.

Defective Chinese-Manufactured Drywall Held Covered “Physical Loss” Under Homeowner Policies

2011-02-24T12:51:00.000-08:00

Over the past few years, news about extensive damage in homes caused by defective drywall manufactured in China has made headlines. Now, a federal court in Louisiana has held that damage caused by that drywall is a “physical loss” covered by a homeowner’s all-risks property policy. In re Chinese Manufactured Drywall Products Liability Litigation, ___ F. Supp. 2d ___, 2010 WL 5288032 (E.D.La. Dec. 16, 2010).

In re Chinese Manufactured Drywall Products is a consolidated matter involving lawsuits by homeowners against the manufacturers, distributors, sellers, and installers of Chinese drywall, as well as claims against the homeowner’s property insurers. Each of the plaintiffs in the consolidated action had Chinese drywall installed in their homes, and they alleged that the drywall emits foul odors and also damages metal (such as plumbing and metal framing) and electronic elements and devices in their homes. A number of the homeowners’ property insurers filed motions against the homeowners, claiming that there was no allegation in the complaint that the damage was covered under their policies.

Physical Loss. The insurers argued that there was no basis for coverage because the drywall was installed in an unsatisfactory state, and the damage it caused was not “physical loss” under the policies. The court disagreed, holding that the insured homes had suffered “physical loss” within the meaning of the insurance policies. Where the drywall had caused a “distinct, demonstrable, physical alteration” of the insured homes, in the form of corrosion and odorous gases, a “physical loss” had occurred. Moreover, the court observed, the policies included “loss of use” as a kind of physical loss under the policies; therefore, because the homeowners were prevented from fully using and enjoying their homes, that loss of use also brought the damage within the meaning of the policies.

Direct, Accidental, and Sudden. Some of the insurance policies at issue also required the loss to be “direct,” “accidental,” and/or “sudden.” The court held that the damage was “direct” where the drywall was the sole cause of the damage to the homes. The court also held that the damage was accidental, where it was unusual and unexpected. Finally, the damage was also “sudden,” because courts have defined “sudden” as either abrupt or unexpected, and the damage caused by the drywall was unexpected. Therefore, the drywall damage was covered under the policies, even though the policies limited coverage to losses that were “direct,” “accidental,” and/or “sudden.”

Ultimately, the Louisiana federal court held that the damage was not covered due to policy exclusions for faulty materials and corrosion. However, the court’s holdings regarding the occurrence of “physical loss” and regarding “direct,” “accidental,” and/or “sudden” damage is an important development for policy holders in that jurisdiction. Washington State has long recognized that covered losses may result from construction defects, and homeowners suffering from damage due to defective Chinese-manufactured drywall or similar circumstances should consult a policyholder attorney to determine if coverage may apply.

CGL Coverage Limits: How Do They Apply?

2011-02-03T10:14:00.000-08:00

If you look at the first few pages (the Declarations) of a standard commercial general liability insurance policy, also called a “CGL policy,” you’ll see a number of different policy limits listed. For those not familiar with insurance, it is not always clear which policy limits apply in which situations. It may surprise some businesses to know that their CGL policy does not always provide coverage up to the policy’s “limit,” and that different limits may apply in different situations. This article will explain some of the common policy limits you may find in a CGL policy, and how those limits frequently relate to one another.

The Declarations of a standard CGL policy will generally list at least four different kinds of policy limits. The first is the General Aggregate Limit. This general aggregate limit is the most the insurance company will pay out for the policy period, regardless of how many different accidents or events are at issue (called an “occurrence” in insurance policy lingo) or individuals are involved. As an example, say that a business’s aggregate limit is $2 million, and the business experienced three different accidents in one policy period: (1) a customer slips and falls on business property, claiming $600,000 in damages; (2) a product sold or installed by the business causes a fire and damages a customer’s building, causing $1,100,000 in damages; and (3) an article on the business’s website and a series of commercials for the business are defamatory of a competitor’s business, and the competitor’s damages are $500,000. In this situation, assuming no exclusions or other limits apply, the aggregate limits would be enough to cover the first two accidents, which together total $1,700,000, since this is less than your $2 million aggregate limit. By the time the third accident occurs with a price tag of $500,000, however, there is only $300,000 left in the aggregate limit to cover additional claims. So, coverage for the third claim would be limited to $300,000, and there would be no coverage for subsequent claims.[1] Graphically, the coverage is as follows:

The next common policy limit is called the Occurrence Limit. This is usually a sub-limit within the aggregate limit, and it is often (but not always) less than the aggregate limit. The occurrence limit is the most that an insurance company will pay for a single “occurrence,” such as one accident or one event, under a CGL policy. Let’s examine this in the context of our three occurrences above, and assume that our policy has a $1 million per occurrence limit. In this situation, the first $600,000 would be within the $1 million occurrence limit. The second occurrence, however, causing $1,100,000 in damages, would exceed the occurrence limit of $1 million. Accordingly, only the first $1 million of the second occurrence would be covered under the policy. Thus, after the second occurrence, the insurance company would have paid $1,000,000 + $600,000, or $1,600,000, under the policy, leaving $400,000 available for the third claim. The difference is as follows:

Another common policy limit is the Personal and Advertising Injury Limit, it is also usually (but not always) a sub-limit of the occurrence limit. The personal and advertising injury limit frequently applies to any single person or organization, regardless of the number of “occurrences” involved. In the example above, where a website article and a series of defamatory commercials damage a competitor’s business, it is possible that the website article is a separate “occurrence” from each of the commercials, and therefore numerous occurrence limits would apply. However, because there is a separate limit for this specific kind of “personal and advertising injury” claim, and only one organization was damaged, the “personal and advertising injury” limit generally applies to all defamatory “occurrences” causing damage to this competitor.

The final common policy limit that we’ll discuss here is the Products/Completed Operations Aggregate Limit. Unlike the limits discussed in the preceding paragraphs, the products/completed ops limit is not generally a sub-limit of the general aggregate limit, and it may be its own independent limit. Like the general aggregate limit, the products/completed ops limit applies regardless of the number of occurrences or individuals damaged. However, instead of applying to all claims generally, the products/completed ops limit only applies to accidents occurring off-premises, and which are caused by a product or service you provided. For example, this limit frequently comes into play in construction defect actions, where a contractor defectively performs work on someone else’s property, and the owner files suit against the contractor after the work is completed. Occurrence limits generally apply within the products/completed ops limit. Consider the accident #2 above, where a product you provide or installed causes a fire at a customer’s building and causes $1,100,000 in damage to the building. A products/completed ops limit of $2 million would be enough to cover this liability; however, the occurrence limit of $1 million would also apply, and so coverage for this claim would nevertheless be limited to $1 million.

These are a few of the limits you may find in a CGL policy. Not all policies are the same, and these limits may apply differently depending on the wording found in your policy. In addition, other limits, such as those specifically addressing damage to rented premises or medical expense liability, may also apply, and your insurance agent or insurance coverage counsel can help you determine what policy limits appear in your policy, and how they may apply in any given situation.

[1] There are situations in which an insurance policy’s limits may be exceeded; however, that discussion is outside the scope of this article.