Opinion ID: 6325956
Heading Depth: 1
Heading Rank: 13

Heading: coverage under the cgl policy

Text: {¶ 102} As stated above, whether there is coverage under the CGL policy depends on whether there was property damage caused by an occurrence. If there was, then the claim is covered, unless an exclusion or endorsement says otherwise.
{¶ 103} According to the CGL policy, “property damage” means “[p]hysical injury to tangible property, including all resulting loss of use of that property.” Under that definition, there was property damage in this case since the incorporation of the insured-supplier’s component product structurally weakened the manufacturer’s final product. See Traveler’s Ins. Co. v. Eljer Mfg., Inc., 197 Ill.2d 278, 301, 757 N.E.2d 481 (2001) (“tangible property suffers a ‘physical’ injury when the property is altered in appearance, shape, color or in other material dimension”).
{¶ 104} Deciding whether there is an occurrence is a little more complicated, but not much. The CGL policy defines the term “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” In the past, this court has interpreted the word “accident,” which the CGL policy leaves undefined, according to its plain and ordinary meaning as a fortuitous event that was both “unexpected, as well as unintended.” Westfield Ins. Co. v. Custom Agri Sys., 133 Ohio St.3d 476, 2012Ohio-4712, 979 N.E.2d 269, ¶ 12-14. {¶ 105} Pointing to Custom Agri and our more recent decision in Ohio N. Univ. v. Charles Constr. Servs., Inc., 155 Ohio St.3d 197, 2018-Ohio-4057, 120 N.E.3d 762, Motorists argues that there was not an occurrence here, because what happened is essentially faulty workmanship, and faulty workmanship is not a fortuitous event. But there is a difference between a claim involving “a bad product” and one involving “bad workmanship,” Indalex, Inc. v. Natl. Union, 83 44 January Term, 2022 A.3d 418, 424 (Pa.Super.2013), and this case involves a bad product, not bad workmanship. Because of that distinction, Custom Agri and Ohio N. are largely inapplicable. {¶ 106} Instead, once those cases are distinguished, the proper inquiry here is simply, and more traditionally, whether the damage caused by the defective product was unforeseen and unintended from the standpoint of the insured. See Lamar Homes, Inc. v. Mid-Contintent Cas. Co., 242 S.W.3d 1, 16 (Tex.2007). If it was, then there is an occurrence. If it was not, then there is no occurrence. Certainly, Ironics neither expected nor intended for its product to damage the glass bottles into which it was incorporated, and thus, there was an occurrence here. See Indalex at 426 (“defective products resulting in property loss, to property other than [the insureds’] products    [is] an ‘occurrence’ ”).
{¶ 107} Having found property damage and an occurrence, the only remaining question is whether any exclusions or endorsements preclude coverage in this case. The exclusions in the CGL policy that Motorists points to here mirror the exclusions in the umbrella policy discussed by the majority opinion. Those exclusions—the “your work,” “your product,” and “impaired property” exclusions—are all similarly inapplicable under the CGL policy. Ironics did not perform any work, its claim is not for damage to its product, and its claim does not involve impaired property that could be restored by removing and replacing its product. {¶ 108} It is worth noting that while those three exclusions clearly do not apply, Motorists could have easily precluded coverage in this case by adding a standard endorsement to the policy that bars claims for “ ‘ “property damage” included within the “products-completed operations hazard.” ’ ” 3 New Appleman Law of Liability Insurance, Section 16.02, quoting standardized form CG 21 04 promulgated by the Insurance Services Office, Inc. Taking into consideration the 45 SUPREME COURT OF OHIO applicable definitions in the CGL policy, an endorsement like that would have precluded coverage for property damage arising out of any goods or products manufactured, sold, handled, distributed, or disposed of by Ironics. See, e.g., Eon Labs Mfg., Inc. v. Reliance Ins. Co., 756 A.2d 889 (Del.2000). {¶ 109} The reason it is worth noting the absence of this endorsement is that we have previously refused to give insureds the benefits of bargains they did not make. See, e.g., AKC Inc. v. United Specialty Ins. Co., ___ Ohio St.3d ___, 2021Ohio-3540, ___ N.E.3d ____, ¶ 16. But that rule works both ways. Just as we cannot rewrite an insurance policy to give an insured coverage that was never purchased, we cannot rewrite an insurance policy to bar claims that the insurer failed to exclude. {¶ 110} Accordingly, in the absence of an exclusion or endorsement stating otherwise, there is coverage under the CGL policy when a defective product is incorporated into and damages a third party’s product or property, and that result was unexpected and unintended from the standpoint of the insured. D. The Economic-Loss Rule and the Lower Court’s Erroneous Decision {¶ 111} In its decision below, the Sixth District Court of Appeals concluded that there was no coverage under the CGL policy because “the economic-loss rule applies in this case” and bars coverage for the manufacturer’s “negligence and product liability claims.” 2020-Ohio-137, 151 N.E.3d 1001, ¶ 28. That rule, however, has no application in this context. {¶ 112} As the majority opinion thoroughly explains in its analysis of the umbrella policy, the economic-loss doctrine “is based on differences between tort law and contract law,” majority opinion at ¶ 27, and is useful only to the extent that it helps determine whether liability sounds in tort or in contract, id. at ¶ 28. {¶ 113} The economic-loss doctrine thus might be useful as “a liability defense or remedies doctrine,” Lamar, 242 S.W.3d at 13, but it “is not a useful tool for determining insurance coverage,” id. at 12. Instead, when, as here, “[t]he 46 January Term, 2022 insuring agreement does not mention torts, contracts, or economic losses,” id. at 13, coverage decisions must turn on the policy’s actual language, Am. Family Mut. Ins. Co. v. Am. Girl, Inc., 268 Wis.2d 16, 2004 WI 2, 673 N.W.2d 65, ¶ 35. {¶ 114} With the economic-loss doctrine removed from our coverage analysis, we can do as the policy instructs and focus on whether there was property damage caused by an occurrence. See Lamar at 13. Because there was an occurrence and resulting property damage, the Sixth District’s decision in this case was incorrect. The economic-loss doctrine does not change that. Consequently, I would reverse the court of appeals’ judgment at least in part and find coverage under the CGL policy.