Q

Our insured is a car wash operation. While washing a car, the insured's employees used a solution to clean the white walls on the tires. Unfortunately, the solution removed the paint from the white walls. The insurer is declining coverage based on the faulty work exclusion of the garagekeepers coverage. We don't agree with that and would like your opinion.

Maryland Subscriber

A

We believe that the insurer is not correct in applying the faulty work exclusion to this type of loss. The exclusion reads “this insurance does not apply to faulty work you performed”. The fact is that this is a completed operations exclusion and should be applied only to faulty work that the named insured has already performed and completed. The wording of the exclusion puts it in the past tense; if the insurer had wanted it to apply to ongoing operations, the wording should have been “… to faulty work that you are performing”. In addition, garagekeepers coverage is for damages for loss to covered autos left in the insured's care while the insured is attending, servicing, repairing, parking, or storing those autos—note that the words “attending, servicing, etc.” are in the present tense. The insured has garagekeepers coverage for damage done while servicing, or in this instance while washing, a covered auto.