Client Alerts
Products-Completed Operations Exclusion Enforced
December 2009
The Second District of California interpreted the insurance industry's standardized “products-completed operations hazard” exclusion, and consistent with other jurisdictions, held that it sets forth two unambiguous, separate and unrelated circumstances under which coverage is excluded. The court found that the damages arising from its inspection services were a work-related, “completed operation,” regardless of whether those inspection services were related to a product.
In this case, the product was a bus which was sold by the insured. Several months after the sale, the insured performed inspection and mechanical services on the bus. A fatal collision occurred involving the bus. The insured’s CGL policy contained an exclusion for products-completed operations hazards, which were defined as bodily injury and property damage that occurred away from the insured's premises and that arose out of the insured's product or work. Finding the policy unambiguous, the court held there was no coverage for the wrongful death claim, and interpreted the policy language to mean that a hazard arising from either the insured's product or the insured's work was excluded, regardless of whether or not the work was related to a product. Although the policy did not specifically include inspection services within the definition of work, the court found that the insured’s inspection services constituted “work” within the meaning of the products-completed operations hazard exclusion, as it was meant in its ordinary and popular sense.
Baker v. National Interstate Ins. Co., 180 Cal.App.4th 1319, 103 Cal.Rptr.3d 565 (Cal.App. 2 Dist.,2009)
