Opinion ID: 1120914
Heading Depth: 1
Heading Rank: 4

Heading: what is an insured's product

Text: Olympic urges that the sistership exclusion does not apply because the canned salmon was not its product or work completed by it, as required by the exclusion. The sistership clause, Olympic contends, precludes coverage only where the insured deals or trades in the goods, but not where it merely provides a service on the product of another. We agree, because the court too broadly interpreted the term insured's products. Olympic's insurance policy defines an insured's product as goods or products manufactured, sold, handled or distributed by the named insured. Clerk's Papers, at 33. Two Washington cases address the meaning of the term insured's product. The courts in Westman Indus. Co. v. Hartford Ins. Group, 51 Wn. App. 72, 78, 751 P.2d 1242, review denied, 110 Wn.2d 1036 (1988) and in Prosser Comm'n Co. v. Guaranty Nat'l Ins. Co., 41 Wn. App. 425, 431, 700 P.2d 1188, review denied, 104 Wn.2d 1016 (1985) stated that: The terms goods or products manufactured, sold, handled or distributed in the clause defining the insured's products, when read together, imply goods which are processed or assembled in the ordinary channels of commerce. The factual differences between Westman and this case undermine its persuasiveness. The insured in Westman both manufactured parts for and completely assembled a boathouse. 51 Wn. App. at 79, 81. The court concluded the boathouse was Westman's product because Westman's business involved both the manufacture and  also involve[d] the provision of services for the boathouse. (Italics ours.) 51 Wn. App. at 81. Olympic, in contrast, did not manufacture anything: it affixed the packers' labels to the packers' cans and placed them in the packers' boxes. Westman is not authority in this case. Prosser also is not persuasive. First, the Prosser definition is tautological. Secondly, the cases upon which Prosser rests uniformly reject a broad definition of insured's product and define an insured's product as tangible items created or manufactured by the insured. See Prosser Comm'n Co. v. Guaranty Nat'l Ins. Co., supra at 431. Prosser, thus, is not controlling in this case. [3] The preferable definition of insured's product is the definition formulated in Paxton-Mitchell Co. v. Royal Indem. Co., 279 Or. 607, 615-16, 569 P.2d 581, 586 (1977). The Paxton-Mitchell court considered whether a products or work exclusion barred coverage of claims against an insured, who installed a crane on a customer's truck when the crane tipped over, and the customer recovered for damage to the truck. The court inquired: What are `goods or products'? These two words standing alone have a meaning which is most commonly associated with the commercial world. They are most often thought of as some tangible or material units in which one trades. The qualifying words `manufactured, sold, handled or distributed' really do not broaden the ordinary meaning associated with these words, but limit `goods or products' to those in which the insured trades or deals.    Henderson, Insurance Protection for Products Liability and Completed Operations  What Every Lawyer Should Know, 50 Neb L Rev 415, 429-30 (1971). 279 Or. at 615-16. The Paxton court concluded that an insured's product is that in which the insured trades or deals, and that the truck was not the insured's product because the insured did not deal or trade in trucks. 279 Or. at 616; cf. Friestad v. Travelers Indem. Co., 260 Pa. Super. 178, 393 A.2d 1212 (1978) (the terms goods and products imply the creation of tangible items); Kammeyer v. Concordia Tel. Co., 446 S.W.2d 486, 489 (Mo. Ct. App. 1969) (goods or products of the named insured refers to goods or products created or manufactured and placed in the ordinary channels of commerce by the insured). We hold that an insured's product refers to goods or products in which the insured trades or deals, including goods created or manufactured by the insured. Olympic did not trade or deal in, manufacture or create the packers' canned salmon. The salmon was not Olympic's product, for purposes of the sistership exclusion in Olympic's policy.