Insurance Law Lesson 58: Biz Risks; “Damage to Property”

In the standard CGL, the first of the business risk exclusions is Exclusion J.: Damage to Property. Its a complicated one. Six parts, and then several modifiers at the end.

Exclusion J does not bar all property damage. The categories of excluded damage shape the CGL for what it is by excluding what it is not.

A CGL is not a first party property policy, so damage to property owned, rented, or occupied by the insured, or in the insured’s care, custody, or control, is excluded.

A CGL is not a performance bond. It does not ensure the quality of the work that the insured is doing (instead, it insure’s damage to other property that is unintentionally caused by the insured while doing such work). Accordingly, the “particular part” of “real property” (ie land and buildings) that the insured is working on or the “particular part” of any property that needs repair or replacement because of the insured’s work that was done to that property.

There is an exception to the final portion of the exclusion (J6 – damage to that part of the property that the insured worked on) for damage included in the Products Completed Operations Hazard. That is a beast unto itself that will be discussed tomorrow.

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