Standard liability policies define property damage as physical injury to tangible property or loss of use of tangible property. The updated ISO form specifically states that “Electronic data“ is not tangible property.
Many states, including Michigan and Illinois, hold that property damage does not include damage to property that the policyholder is constructing.
Judge Flaum writing for the 7th circuit explained:
“If insurance proceeds could be used for damages from defective workmanship, a contractor could be initially paid by the customer for its work and then by the insurance company to repair or replace the work. Treating a CGL policy like a performance bond would be unjust to the CGL insurer, which, in contrast to the surety on a performance bond, cannot bring suit against the contractor for the defective construction.” Lagestee-Mulder, Inc. v. Consolidated Insurance Company (7th Cir. 2012).
Banked funds in Michigan are not tangible property. What about stacks of cash?