Opinion ID: 2088479
Heading Depth: 1
Heading Rank: 6

Heading: Sistership Exclusion

Text: Plaintiffs further contend that the sistership exclusions contained within their respective policies operate to preclude any potential policy coverage. The sistership exclusion excludes coverage for: Damages claimed for the withdrawal, inspection, repair, replacement or loss of use of the named insured's products or work completed by or for the named insured or of any property of which such products or work form a part, if such products, work or property are withdrawn from the market or from use because of any known or suspected defect or deficiency therein. Plaintiffs argue that the allegations of the underlying complaints fall squarely within this policy exclusion. In particular, plaintiffs contend that the underlying complaints seek to recover damages for the inspection of the buildings, removal of the asbestos-containing products and replacement of this product because of a known defect, i.e., the asbestos-related health hazard. The sistership exclusion excludes coverage in cases where, because of the actual failure of the insured's product, similar products are withdrawn from use to prevent the failure of these other products, which have not yet failed but are suspected of containing the same defect. ( Honeycomb Systems, Inc. v. Admiral Insurance Co. (D.C.Me.1983), 567 F.Supp. 1400, 1406.) The exclusion applies only to the costs associated with the withdrawal and repair or replacement of sister products which have not yet failed. It does not apply, however, to the product that has already failed while in use and caused damage to the property of a third party. Honeycomb, 567 F.Supp. at 1407; see Charles E. Brohawn & Brothers, Inc. v. Employers Commercial Union Insurance Co. (Del.1979), 409 A.2d 1055, 1057-58; Aetna Casualty & Surety Co. v. Monsanto Co. (Fla.App.1986), 487 So.2d 398, 400. In the instant action, the underlying complaints allege that the asbestos-containing product has already failed while in use, resulting in damage to the property of the building owners. The underlying complaints seek damages for the inspection of the buildings and the removal and replacement of this product, not as the cost of a preventative action withdrawing sister products from the market, but as a measure of the property damage which has already been incurred by reason of this product. Therefore, we hold that the policies' sistership exclusions are inapplicable in the instant case and do not preclude potential coverage under the policy.