Real Property and the Your Product Exclusion

April 13, 2015

Our insured was hired to perform construction work for a customer, and as part of the work metal light boxes, which were part of the fixture heads, were to be installed on exterior light poles in the customer's parking lot. Our insured hired a subcontractor, who supplied all the materials and labor for all the work. Years later, some of the light boxes fell apart and they were found to have been defectively made but not defectively installed. The customer is making a claim for the cost of replacing all of the defective fixtures, both the ones that fell apart and the ones that had not yet fallen apart.

I believe that the Recall of Product, Work or Impaired Property exclusion will apply relative to the boxes that had not yet failed. I know that since a subcontractor supplied and installed the items, the Your Work exclusion will not apply. However, I believe the Your Product exclusion may apply because I believe the light boxes that failed may still be considered to be the insured's product because they were part of what was sold to the customer, even though the boxes were actually supplied and installed by the subcontractor. (However, if the boxes became real property after they were installed on the parking lot poles, then the exclusion would not apply.)

Connecticut Subscriber

We agree with your analysis. As for the boxes, they would be considered real property since they were installed/attached to poles grounded in the parking lot. Items attached to the earth/ground/buildings/structures are considered real property, so the your products exclusion will not apply in this instance.