How to Tell if Your Clients Need Discontinued Product Coverage

An Iowa agency insured a plumbing and heating business with a CGL policy on a standard CG 00 01 occurrence form for many years before it closed in summer 2014. In spring 2015, a minor fire resulted from a furnace installation that occurred while the policy was in force and the company was still in business.

The agency submitted a claim, but the insurance company denied coverage under the CGL because the fire occurred after policy cancellation—and neither the occurrence nor claims-made CGL policies covers occurrences that result in bodily injury or property damage after expiration of the policy.

The above scenario—a real-life case outlined in a submission to the Big “I” Virtual University Ask an Expert service—highlights one of the most important aspects of insuring commercial clients’ product liability today: coverage for discontinued products and operations.

“What is often not clearly understood is it’s the policy that’s in effect when the bodily injury or property damage takes place that is triggered, and not the policy in place when the product is made or sold or purchased,” explains Craig Stanovich, principal consultant at Austin & Stanovich Risk Managers, LLC in Holden, Massachusetts. “Products you have previously made or sold that are still in the stream of commerce can still cause injury or damage. Unless you keep a CGL policy in place that still includes product liability coverage when the injury or damage actually occurs, you won’t have any coverage.” Read the full article.

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