Another “your product” exclusion contained in the CGL deals with the potential liability caused by product recall.  The exclusion’s purpose is to prevent the CGL insurer from becoming liable for this risk. 

I’ll explain this exclusion in two parts, starting with the when this exclusion applies.  Here is the specific policy language:
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This insurance does not apply to (title of subsection) recall of products, work or impaired property

… if such product, work or property is withdrawn or recalled from the market or from use by any person or organization because of a known of suspected defect, deficiency, inadequacy, or dangerous condition to it. 

Withdraw means “to take back or away,”[1] while recall is “an official order to return.”[2]  The former is a voluntary action while the second is an official order.  Both verbs are past tense, meaning each action is completed.[3]  “Market” is the most commonly used noun to describe the place or location where goods are bought and sold[4] while “use” is the “application or employment of something for some purpose.”[5]  The former implies that the good is still on the shelves while the latter connotes that the good has already been employed for some purpose. 

“Because of” is a conjunction, which means, “By reason of.”[6]  The words following the phrase justify why the good was withdrawn or recalled.  Here, there are three reasons:
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1. The good has a “defect” or, “an imperfection;”[7] the good is faulty.
2. “Deficient” means lacking a quality.[8]  Something is missing from the good such that it can’t perform as advertised.  The suffix -y means, “having the quality of.”[9]  The suffix converts an adjective into a noun.
3. “Adequate” means “satisfactory or acceptable,”[10] while the prefix “-in” means “not.”[11]
4. “Danger” means “perilous”[12] while the suffix “-ous” means “characterized by.”[13]  Put another way, the good is perilous.

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The purpose of listing a group of nouns which describe the problem is to case as wide a net as possible with the intention of incorporating all known possibilities – which this description does well.
 
 
 
 
 
 
      
   
 
 
 


[1] American Heritage Dictionary, Second College Edition, © 1985, p.1387

[2] American Heritage, p. 1032

[3] The Chicago Manual of Style, 16th edition, © 2010 p. 233

[4] The Concise Oxford English Dictionary 11th Edition, © 2005 p. 874 (“an arena in which commercial dealings are conducted.”)

[5] American Heritage, p. 1331

[6] Oxford p. 119

[7] Oxford, p. 375

[8] American Heritage p.375

[9] American Heritage, p. 1399

[10] Oxford, p. 16

[11] Oxford 717

[12] American Heritage, p. 365

[13] American Heritage, p. 861

The previous post discussing the “your work” exclusion explained the CGL’s coverage exception for the physical work performed by or on behalf of the insured.  That exclusion also applies to the insured’s communications meant to assure a third party regarding the specific attributes or qualities of the insured’s work.

Here is the exact wording of the exclusion.

This insurance does not apply to property damage to your work arising out of it or any part of it.

“Your work” includes warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of “your work.”

A “Warranty” is “an assurance by the seller of property that goods or property are as represented or will be as promised.”[1]  The verb “represent” means, “to describe as an embodiment of a specific quality.”[2]  Representation is a noun derived from the verb.[3]  Both nouns are categories of the broader statements made by a seller to a buyer that represent certain aspects of the goods sold.

This exclusion applies to five specific types of statements regarding goods:

1. Fitness means, “of a suitable quality, standard. or type.”[4]  Here, the seller promises that the good complies with certain specifications.[5]  
2. Quality has two applicable definitions.  The first is, “a distinguishing characteristic,”[6] where the seller identifies a certain feature that is likely key to the sale.  Quality also means, “a degree of excellence,”[7] which implies the good is somehow better than similar items.
3. Durability is defined as, “capable of withstanding wear and tear.”[8]  This adjective goes to the expected life of the good.
4. “Performance” is based on the verb “perform” which means, “work, function, to do something to a specified standard.”[9]  The suffix -ance has several definitions; here, it means, “denoting a quality or state.”[10]  Therefore, performance is, “the state of performing.”  A representation about a goods “performance” focuses on how that good will function and implies a minimum level of capability.
5. The American Heritage dictionary defines “use” as, “a purpose or way something is used.”[11]  Here, the insured is describing how a third party might implement the good.

The combined impact of these five adjectives is very broad and should cover all statements that the insured could potentially make about his “work.”

For a further discussion of the concepts involved, please see the Uniform Commercial Code's discussion on warranty.


[1] The American Heritage Dictionary, Second College Edition, © 1985, p. 1364

[2] Id at 1049

[3] The Concise Oxford English Dictionary, Second Edition, © 2004, p. 1511. The suffice -tion is used to make a noun from a verb. 

[4] Oxford, p. 537

[5] The American Heritage Dictionary observes that fitness means the good is “right or correct in view of the circumstances.”  p. 508

[6] Oxford, p. 1174

[7] Online Merriam-Webster Dictionary, https://www.merriam-webster.com/dictionary/quality, last visited on March 3, 2019

[8] American Heritage, p. 430

[9] Oxford. p. 1064

[10] Oxford, p. 47

[11] American Heritage, p. 1331