THE (j)(5) and (j)(6) DAMAGE TO PROPERTY EXCLUSIONS IN CGL POLICY

UnknownThe case of Essex Ins. Co. v. Kart Const., Inc., 2015 WL 4730540 (M.D.Fla. 2015) is an insurance coverage dispute.  In this case, a fire started after a contractor’s welding operations to the metal exterior of a tower that damaged components of the tower.  (In addition to the welding, the contractor was responsible for fire prevention measures to, among other things, monitor the welding during the welding and for a couple of hours after the welding.)

 

The contractor had a CGL policy.  The CGL carrier denied coverage.

 

The policy contained the (j)(5) and (j)(6) exclusions:

 

j. Damage To Property

“Property damage” to:

(5) That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the “property damage” arises out of those operations; or

(6) That particular part of any property that must be restored, repaired or replaced because “your work” was incorrectly performed on it.

 

The Middle District of Florida gave a great explanation regarding the application of the (j)(5) and (j)(6) exclusions in a CGL policy:

 

(j)(5)

In sum, Section (j)(5) excludes from coverage damage to “that particular part” of the real property on which the insured [contractor] is operating at the time of the accident [the moment of the accident]…..

Kart Const., supra, at *6.

 

(j)(6)

 

Unlike the “operations” under Section (j)(5), the “work” under Section (j)(6) need not occur at a specific time (e.g., the moment of the accident) for the exclusion to apply. Section (j)6) excludes damage to a “particular part of … property” if the insured [contractor] “incorrectly performed” work (at any time) on that part and the “incorrectly performed” work caused, or contributed to, damage to that part.

 

 

In sum, under Section (j)(6), the policy might exclude the damage to the tower if Kart [the contractor] incorrectly performed fire-prevention work on the tower (that is, incorrectly removed debris from the tower or incorrectly wet the tower) and that incorrect work caused, or contributed to, the tower’s damage.

Kart Const., supra, at *6, 7.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

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