December 6, 2011

We are handling a claim where the claimant is seeking ALE due to an AC unit not functioning correctly after the insured worked on it. We have determined we do not have coverage for the AC unit itself, so the question is, would we have coverage for the ALE associated with the claimant's allegations that due to extreme temps, she needed to find other living arrangements due to the AC unit not functioning?

Ohio Subscriber

The definition of property damage includes the loss of use of tangible property that is not physically injured. So, if the insured is liable for the claimant's loss of use of the living quarters, that fits the definition of PD. However, exclusion m, damage to impaired property or property not physically injured may apply depending on the circumstances. That exclusion applies to PD to property that has not been physically injured arising out of a defect, deficiency, inadequacy, or dangerous condition in the named insured's work. So, if the insured's defective work caused the loss of use of the living quarters, the exclusion will prevent coverage.