Claim Background:
Our insured installs hot water heaters purchased at Lowe's, covered under a Businessowners Package policy.
On 3/29/21, the claimant noticed water on her first floor carpet. She called a plumber who said that she needed a new water heater, because he could see water underneath hers. He was too busy to get her one that day. NOTE: Her water heater is housed on the second floor of her home.
On 3/30/21, she went to Lowes and purchased a new hot water heater.
On 3/31/21, our insured's employee arrived at the claimant's home with her new hot water heater. Before bringing it into the house, he inspected her current situation. He advised that there was nothing wrong with her current water heater, but that a pipe leading into it from above had burst inside the wall, and water was dripping down the side of it. He offered to return the new hot water heater to Lowe's and get her a refund, to which the customer agreed.
On 4/1/21, the customer had another plumber come out to look at the leak the insured had told her about, and he said that the water heater was definitely the problem.
Before the customer could have a new water heater installed, on 4/2/21, she discovered wet floor and her first floor ceiling buckled.
She and her homeowners carrier are now making a claim against our insured.
Question:
Our insured did not affirmatively do anything at the claimant's property, but they did not do what they were hired to do and arguably gave the claimant bad advice. Does this constitute an occurrence as to trigger coverage under the policy? Are there any other provisions in the BOP that might preclude coverage?
Ohio Subscriber
Answer:
After review of the ISO standard BOP policy, we have determined that this loss would fall within the professional services exclusion and as such there would be no coverage. We also do not see where the loss meets the definition of an "occurrence" since it was not an accident.
The professional services exclusion excludes injury or damage caused by the rendering or the failure to render any professional services. While the policy gives some examples, the exclusion is not limited to the professions listed. When a policy term is not defined, it will fall to its standard definition in a common dictionary. Using the standard definition, the installation contractor was a professional who failed to render the professional service of one in his or her profession.
Merriam-Webster online defines a professional (in part) as follows:
Definition of professional
1a: of, relating to, or characteristic of a profession
b: engaged in one of the learned professions
c (1): characterized by or conforming to the technical or ethical standards of a profession
(2): exhibiting a courteous, conscientious, and generally businesslike manner in the workplace …