Coverage Territory under CGL Form

December 12, 2016

Our insured sells machine parts. If for some reason a product that he sells ends up outside the United States, not due to a direct sale but due to having been stolen or redirected, and a product liability claim arises against our insured, does the commercial general liability coverage form apply to such a claim?

Florida Subscriber

All parts of the world are considered as coverage territory under the terms of the CGL form if the injury or damage arises out of the goods or products made or sold by the named insured in the United States, Puerto Rico, or Canada. This is so with the proviso that the insured's responsibility to pay damages is determined in a lawsuit on the merits in these same countries.

In your scenario, the answer is that if the insured sells the machine parts in the U.S., Puerto Rico, or Canada, and the product ends up in Asia or Cuba or some other place and it injures someone or damages some property, the CGL form will apply as long as the responsibility of the insured is determined by a lawsuit filed in the U.S., Puerto Rico, or Canada.

The point that the insured's product was stolen does not affect the defense obligation of the insurer under the CGL form. A trial would determine liability and the duty to indemnify, but the duty to defend is there as long as the lawsuit is filed in the U.S., Puerto Rico, or Canada.