Our insured sells grave markers/monuments. The insured sold grave markers to two separate families several years ago when the first spouse of each family passed away. The grave markers were placed in each family's cemetery plot. The grave markers are designed so that when the second spouse dies, their name and date of death are added to the grave markers. Both surviving spouses recently died and the insured was contacted to have their names added to the grave markers. The insured hired an independent engraver (sub-contractor) to engrave the names and dates on both stones. When the subcontractor completed the engravings, she sent photos to the insured. The insured realized that the subcontractor had engraved the wrong date of death on each grave marker. The subcontractor had erroneously switched the dates of death between the two grave markers. The insured has indicated that he cannot repair the grave markers with the correct date of death and is making a claim to replace each grave marker. Note that no one from either family has contacted the insured to make a claim.
It is my understanding that grave markers that have been placed in the ground are considered to be real property.
I believe this would be considered an operations loss, not a completed operations loss, and thus I am questioning coverage exclusions j(5) and j(6).
Question:
1. Would j(5) and j(6) preclude coverage for the cost to replace the entire grave marker? 2. Would there be coverage for the grave marker, less the cost of engraving the recently deceased's name and date of death onto a new grave marker?
Ohio Subscriber
Based on its common definition, and the coverage for covered property for building in the commercial property coverage form, the installed grave markers are indeed real property.
Exclusions j. (5) and (6), and k. and l. do apply in this situation.
Exclusion j.(6) applies because the grave marker is indeed real property, thus excluding the repair or replacement of the inaccurate grave markers. Exclusion j.(5) would only apply if the insured was still performing operations on the grave markers.
Exclusion k. excludes damage to the grave markers, which are the insured's product. Exclusion l. excludes the damaged work of engraving to the insured's product done by the contractor.
Further, exclusion m. Damage to Impaired Property or Property Not Physically Injured applies since there was no physical damage to the grave markers but there was a failure by the insured's contractor to perform the contract in accordance with its terms.
As you describe the situation, the insured outsourced the engraving to a contractor. This is not a subcontractor situation; unless there was a third party involved who was hired by the insured's contractor simply to do the engraving. If that is the case, then this could change our answer, since the Damage to Your Work exclusion does not apply to work done by a subcontractor.
The installed grave markers meet the form's definition of a "products-completed operations hazard" since the work has been completed, and any work that needs repair or replacement but is otherwise complete is treated as complete.
The insured should however notify their insurance carrier and their contractor of the engraving error, in accordance with paragraph 1.d.(3) of the GL Insuring Agreement, since the insured is aware that there is a potential for claims that could arise if the family owners of the grave markers at some point discover the mistake. Even though there is no coverage for the insured under the policy, this will protect the insured's interests in case they are at some time in the future named as a party in a suit regarding this situation.