Contract—Occurrence—One More Time—#1

   I know that we have talked about this topic before but the next several BLOGS will try to discuss/explain things one more time. I am also doing this as we have new readers and we need to “bring up” a couple of interesting recent court cases.

    Blanket Contractual—-what is it? It is a great coverage but it only covers bi/pd to 3rd parties assumed by contract. In addition, it only has to do with “tort” liability—-civil wrongs. It has nothing to do with the performance of contracts (think surety) and it “comes to you” via an exclusion. 

    Exclusion ‘b’ of the CGL is an almost total exclusion relative to Contracts. The only exceptions are liability assumed under an “insured contract” which relates only to “tort liability to 3rd parties” and coverage if “you would have been liable in the absence of the contract or agreement”. CGL policies do not cover pure contract situations. To make this even more 'interesting’ we have things like the Economic Loss Doctrine and, now, the Integrated Product Doctrine. If the loss can only be recovered “in contract” it is not covered by a CGL.

     What has made this a real problem in recent years is that many carriers say that there is “no coverage under the CGL” the moment that the word contract is mentioned. They totally forget the important exception that is made in ALL liability policies—-(1)   That the insured would have in the absence of the contract or agreement; —- This has been causing some real problems and next BLOG we will discuss a recent case in Texas that goes over this whole issue——one more time.