So the insured, being the diligent car owner and maintenance-oriented person that he is, appears at his auto shop for a routine oil change. However, the insured auto shop failed to adequately tighten the oil drain plug, causing all of the installed oil to leak out. According to the insured, this was a routine oil change, performed every six months, and there must have been a mistake in the drain plug tightening process. As a result, the engine completely seized, causing the entire engine to need to be replaced.
Notable Timestamps
[ 00:15 ] - The customer files a lawsuit against the insured auto shop. The insured auto shop has a CGL policy is seeking coverage for the engine repair under that policy.
[ 01:30 ] - Are the days of changing your own oil over?
[ 02:33 ] - The insured must establish that this event was an occurrence-- an accident or unexpected event. Courts are split on whether faulty work constitutes an occurrence.
[ 05:00 ] - The "Your Work" exclusion bars coverage for property damage to the insured's work, or any part arising out of it. On the one hand, lack of oil caused the engine to seize. On the other hand, the shop didn't work on the engine itself. Courts would be split.
[ 08:40 ] - The majority position (on engine repair specifically) follows Travelers Ins. Co. v. Volentine, 578 S.W.2d 501 (Tex. App. 1978): the whole engine is considered "other property" in cases such as this.
[ 10:33 ] - The minority position is represented by Barbee v. Hartford Mut. Ins. Co. 408 S.E.2d 840 (N.C. 10/3/91) and State Auto. Mutual Ins. v. Glover, 253 Miss. 477 (1965).
[ 13:04 ] - The intent of the "Your Work" exclusion is to limit coverage to the scope of the work the insured was hired to perform.
[ 15:13 ] - Michele provides a recap of the scenario and the points above.
Your PLRB Resources
IIs There CGL Coverage for Damage to an Engine Caused by Insured's Faulty Repair of Timing Chain? 2021.09.10 - https://www.plrb.org/documents/is-there-cgl-coverage-for-damage-to-an-engine-caused-by-insureds-faulty-repair-of-timing-chain-2021-09-10/?search=faulty%20work%20engine%20repair
Commercial General Liability Policy Annotation Key GL52, Your Work Exclusion - https://www.plrb.org/documents/gl52-your-work-exclusion/
Coverage Contrarian Podcast: Engine Servicing and Workmanship - https://www.plrb.org/courses/the-coverage-contrarian-engine-servicing-workmanship/
Employees of member companies also have access to a searchable legal database, hundreds of hours of video trainings, building code materials, weather data, and even the ability to have your coverage questions answered by our team of attorneys (https://www.plrb.org/ask-plrb/) at no additional charge to you or your company.
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