(Article from Insurance Law Alert, July/August 2018)
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A Minnesota federal district court ruled that a “Your Product” exclusion in a liability policy precludes coverage for property damage claims based on alleged defects in the windows installed in a building. Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Viracon, Inc., 2018 WL 3029054 (D. Minn. June 18, 2018).
Underlying suits against Viracon, a glass manufacturer, alleged that defects in the glass products used in two buildings caused damage to windows and to property within the buildings. National Union defended Viracon under a reservation of rights and sought a declaration of no coverage.
Ruling on National Union’s summary judgment motion, the court rejected the insurer’s assertion that the costs to repair or replace the allegedly defective windows is outside the scope of covered property damage. However, the court held that such damage was excluded by a “Your Product” exclusion. The exclusion bars coverage for property damage to “Your Product arising out of it or any part of it,” but does not apply to “real property.” Viracon argued that the exclusion did not apply because the windows, as attachments to the buildings, constitute “real property.” The court disagreed, concluding that the windows were not real property and that the exclusion therefore applied.