The commercial general liability policy’s “your product” exclusion is no stranger to coverage disputes – although it gets nowhere near the attention that its neighbor, the “your work” exclusion, does.

But one aspect of the “your product” exclusion, that almost never needs any discussion, is whether the “property damage” to the insured’s product actually arises out of the product or any part of it, as required by the exclusion.

In other words, the defective product was usually made by the insured -- and coverage is being sought for a defect or some other problem with it.  Thus, the exclusion is satisfied if the
“property damage” is to the insured’s product.

But in Goose Ridge, LLC v. Ohio Cas. Ins. Co., No. 24-1058 (W.D. Wash. May 19, 2025), the coverage dispute was a reminder that the “your product” exclusion is not simply an exclusion for “property damage” to the insured’s product.  Rather, the text of the exclusion also requires that the property damage arise out of the insured’s product or any part of it.

At issue in Goose Ridge was coverage for a settlement by Goose Ridge, a winery that both makes wine for itself and other wineries.  Goose Ridge made wine for winery K Vinters -- but it was defective and unsaleable.  K Vinters blamed Goode Ridge, saying that the bad wine was caused by Goose Ridge’s faulty vinification.  Arbitration ensued and a settlement was reached.  Goose Ridge’s primary and umbrella insurer paid it but another umbrella insurer, Ohio Casualty, refused contribution.

Goose Ridge filed a coverage action and the court addressed a summary judgment motion brought by Ohio Casualty [although the court mistakenly stated that it was brought by Goose Ridge].

Several issues were addressed, including the insurer’s argument that the “your product” exclusion precluded coverage.  After all, the “property damage” was to Goose Ridge’s product, the wine it had made for K Vinters.  However, as noted above, the exclusion also requires that the property damage arise out of the insured’s product or any part of it.

The insurer argued that it did.  And that would be the case if the wine was damaged during Goose Ridge’s winemaking process.  But not so if the damage arose out of “some distinct source.”

As you can imagine, it was expert-city on how the wine was damaged.  And that dispute led to the denial of the insurer’s motion for summary judgment on this issue. 

The discussion of this, as you would expect, is technical.  So I set it out here verbatim as it is the complexity of the explanation that makes the point that applicability of the “your product” exclusion can involve more than simply what was damaged, but, also, how it was damaged.  The court stated:

“There remains a dispute of fact as to what caused the high VA and low SO2 in the 2020 Substance Cabernet Sauvignon such that the Court cannot conclude that the loss arose out of the winemaking process and not some distinct source. Relying heavily on K Vintner’s arbitration demand, Ohio Casualty argues that Goose Ridge’s own negligence allowed oxygen into the fermentation process, causing the high VA and low SO2 levels. If true, the damage to the wine occurred during the creation of the product and it falls within the exclusion because the damage arises out of the product itself. But Goose Ridge points to evidence developed in the arbitration identifying several sources distinct from the winemaking services it contractually provided that could have caused the damage to the wine. Goose Ridge’s expert, Tim Donahue, asserts that the grapes that K Vintners delivered to Goose Ridge suffered from smoke, excessive heat, and frost damage, which was entirely uncontrolled by and distinct from Goose Ridge’s winemaking process. He also asserts that K Vintner’s demand that Goose Ridge use of an agglomerated closure system allowed oxygen into the wine and that this, too, was a distinct cause of the low SO2 levels. These alleged causes of the harm to the 2020 vintage are distinct from the wine, as the Winemaking Agreement required Goose Ridge to accept the grapes K Vintners delivered and to use the closure system K Vintners specified.” (emphasis added).

Critically, Goose Ridge pointed to evidence identifying several sources of the possible causes of the damage to the wine distinct from the winemaking services it contractually provided.  As the court noted, “these alleged causes of the harm to the 2020 vintage are distinct from the wine.”

Thus, while Goose Ridge’s product, the wine, was damaged, the damage may not have arisen out of the insured’s product or any part of it. 

A good reminder of this issue that usually does not come up in “your product” exclusion cases.