“Impaired Property Exclusion” Doesn’t Apply Where Repair Requires More Than “Simply” Replacing Insured’s Product or Work

2/5/2010 Articles

A typical CGL policy covers the "loss of use" of property as one form of "property damage."  If a contractor or product manufacturer performs defective work or provides a defective product to a factory, and the factory goes in and out of service, or operates inefficiently or at less than capacity, there is a "loss of use" under the policy.  A claim by the factory owner may be covered under the contractor's or manufacturer's CGL.  The main obstacle to coverage will be whether the "impaired property" exclusion applies.

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