Opinion ID: 1735720
Heading Depth: 2
Heading Rank: 4

Heading: Interpretation of the Products-Completed Operations Hazard Exclusion

Text: Despite the broad interpretation of the term arising out of, Taurus argues that a majority of courts around the country have interpreted products-completed operations hazard exclusions to exclude coverage only for defective products. State courts have arrived at different conclusions on that issue. As Taurus argues, several jurisdictions have limited the exclusions to defective products. See Viger v. Commercial Ins. Co. of Newark, N.J., 707 F.2d 769, 773 (3rd. Cir.1983); Nautilus Ins. Co. v. Don's Guns & Galleries, Inc., No. IP 99-0735-C-Y/G, 2000 WL 34251061 at  (S.D.Ind. Jan.26, 2000); Brewer v. Home Ins. Co., 147 Ariz. 427, 710 P.2d 1082, 1084 (Ct.App.1985); Farm Bureau Mut. Ins. Co. of Ark., Inc. v. Lyon, 258 Ark. 802, 528 S.W.2d 932, 937 (1975); Chancler v. Am. Hardware Mut. Ins. Co., 109 Idaho 841, 712 P.2d 542, 546 (1986); Ada Resources, Inc. v. Don Chamblin & Assocs., Inc., 361 So.2d 1339, 1343-44 (La.Ct.App.1978); Cooling v. U.S. Fid. & Guar. Co., 269 So.2d 294, 297 (La.Ct.App.1972); Am. Trailer Serv., Inc. v. Home Ins. Co., 361 N.W.2d 918, 920-21 (Minn.Ct.App.1985); Royal Plastics, Inc. v. State Auto. Mut. Ins. Co., 99 Ohio App.3d 221, 650 N.E.2d 180, 183-84 (1994); Hartford Mut. Ins. Co. v. Moorhead, 396 Pa.Super. 234, 578 A.2d 492, 496 (1990); Gen. Ins. Co. of Am. v. Crawford, 635 S.W.2d 98, 101-02 (Tenn.1982); Colony Ins. Co. v. H.R.K., Inc., 728 S.W.2d 848, 851 (Tex.App.1987). Some of these cases, however, considered policy language different from that at issue here. Other jurisdictions have held that the exclusion applies more broadly. See Hagen Supply Corp. v. Iowa Nat'l Mut. Ins. Co., 331 F.2d 199, 202-03 (8th Cir.1964); Eon Labs Mfg., Inc. v. Reliance Ins. Co., 756 A.2d 889, 893 (Del.2000); Cobbins v. Gen. Accident Fire & Life Assurance Corp., 53 Ill.2d 285, 290 N.E.2d 873, 876 (1972); Tiano v. Aetna Cas. & Sur. Co., 102 Mich.App. 177, 301 N.W.2d 476, 479 (1981); Fred Steinheider & Sons, Inc. v. Iowa Kemper Ins. Co., 204 Neb. 156, 281 N.W.2d 539, 543 (1979); Pa. Gen. Ins. Co. v. Kielon, 112 A.D.2d 709, 492 N.Y.S.2d 502, 503-04 (N.Y.App.Div.1985). [5] From our review of these cases, we draw three conclusions: first, most courts have not considered whether products-completed operations hazard exclusions should apply only to defective products; second, those that have are split on the issue; and third, the language of the policy is the most important factor. We do not believe that a fair reading of the exclusion at issue here would apply it only to defective products. Certainly the word defective is found nowhere in the exclusion. The language is much broader, applying the exclusion to all bodily injury and property damage . . . arising out of your product The term your product is defined as any goods or products . . . manufactured, sold, handled, distributed or disposed of by Taurus. The word any before goods or products connotes a scope extending beyond merely defective products. Therefore, nothing in the text of the exclusion suggests it applies only to defective products. As one court has noted, in order to limit the . . . exclusion provision to defective products, we would need to read into the text a requirement that is simply not there. Brazas Sporting Arms, Inc. v. Am. Empire Surplus Lines Ins. Co., 220 F.3d 1, 6 (1st Cir.2000). But, as we previously have emphasized, [w]e cannot place limitations upon the plain language of a policy exclusion simply because we may think it should have been written that way. Deni Assocs., 711 So.2d at 1139. The plain language of the exclusion in this case excludes coverage for all product-related injuries, not merely defective products. We render no opinion about policy exclusions with different language. Taurus nevertheless argues that applying the exclusion to encompass more than defective products may create gaps in insurance coverage, contrary to Florida public policy. See Farrer v. U.S. Fid. & Guar. Co., 809 So.2d 85, 94 (Fla. 4th DCA 2002) (noting that a comprehensive general liability policy should be construed as leaving no gap in coverage between it and an automobile policy). Taurus reasons that if an insured wished to obtain total coverage and purchased a comprehensive general liability policy with a standard products hazard exclusion and products hazard coverage, a gap in coverage could result if the products hazard exclusion were read to encompass more than defective products claims. In a situation such as this one, Taurus argues, products liability coverage would not cover the claims made in the underlying litigation because many of them involve claims of negligent distribution and other non-product-related issues. Contrary to Taurus's argument, interpreting the products hazard exclusion as encompassing more than defective products would not create gaps in coverage. Insurers offer optional products-completed operations hazard coverage. See, e.g., Cobbins v. Gen. Accident Fire & Life Assurance Corp., 53 Ill.2d 285, 290 N.E.2d 873, 877 (1972) (holding that the term product hazard in a policy applies to all product related injuries, including the sale of the wrong product or the wrongful sale of a product to a customer so long as the other requisites also are present); Abbott v. Meacock, 155 Ariz. 260, 746 P.2d 1, 3 (Ct.App.1987) ([W]e conclude that products liability coverage would apply not only where the product has been designed or manufactured defectively, but also where the product has been recommended and installed for an improper use.). Taurus's policy, for example, contains an optional products-completed operations hazard coverage that exactly dovetails the exclusion. Essentially, the exclusion and the optional coverage are mirror images, containing the same definition of a products-completed operations hazard. Therefore, the optional coverage covers everything the exclusionary provision excludes. An insured such as Taurus has the option of purchasing such coverage.