The developer of the property sold, for example, still can be sued and held accountable for damage to the property long after it has changed hands. It may appear to be insulting even to mention the foregoing, but there are producers in the business who do not understand the principle of insurable interest as it pertains to liability insurance. In essence this provision states that the insurance does not apply to bodily injury or property damage arising out of the conduct of any joint venture or partnership that was not identified as a named insured on the policy. What this producer did was remove reference to the particular partnership that divested itself of real property. When this partnership was sued many years later for injuries to invitees, it had a rude awakening.
Many entrepreneurs begin their business ventures as sole proprietors.
When they feel they are successful in what they are doing, they may incorporate as a move to protect their assets. With the liability policy written for the sole proprietor generally giving way to a policy naming a corporation, reference to the sole proprietorship becomes history. Another producer found out the hard way that it might be a good idea to continue naming the sole proprietorship as a named insured. What happened was that an individual built a house for investment purposes. He also subcontracted part of the work that eventually was the cause for damage and suit.