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Vol. 11 - Issue 4

August 15, 2022


An Overlooked Coverage Issue: The Policy’s Business Description


In my experience, there is not always focus on whether a liability claim arose from the insured’s engagement in the business described in the policy or premium classification.  In other words, it is sometimes taken for granted that the policy was intended to cover all of the insured’s business activities, whatever they may be.  So long as the party named in the complaint in the same party listed on the policy’s declarations page, there is nothing to see here. Move along.  And, for the most part, there is nothing to see here.

But, in some cases, this issue is looked at closely.  And insurers have had success in establishing that a claim, perhaps otherwise covered, is not, as the insured’s liability was on account of performing operations outside the scope of those permitted by the policy.

This issue was the focus of two decisions last month.

Before the court in First Mercury Ins. Co. v. ARMR Group, No. 21-98 (E.D. Ky. July 26, 2022) was general liability coverage for ARMR for harm caused by its application of an anti-microbial solution – shockwave -- while working as a subcontractor on a construction site.  The court held that, because ARMR’s Group’s application of the solution did not constitute “painting” -- the activity within the covered business description contained within the policy – no coverage was owed.  The court looked at various definitions of painting, which was not defined in the policy, and concluded that, no matter how you sliced it, “painting is not cleaning.” Therefore, no coverage was owed.  
RML Construction v. Gotham Ins. Co., No. A-3358-19 (N.J. Super. Ct. App. Div. July 8, 2022) provides another example.  The court held that no coverage was owed to an insured, under a policy that contained a classification for landscape gardening, when the insured was sued for wrongful death that occurred in the course of performing a contract to remove 2,000 trees damaged during Superstorm Sandy.  The court looked at the definition of landscape gardening, which was not defined in the policy, and concluded that, no matter how you sliced it, “[a] commonsense interpretation of landscape gardening does not include tree removal on a massive scale.”  




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