The role of Commercial General Liability (CGL) insurance to support manufacturers has changed over the years; it has become a less utilized asset. For manufacturers of significant scale, the historical model of “dollar-one coverage” is unaffordable or otherwise unattainable. Deductibles, self-insured retention and “fronting policies” are common. It has long been the insurer’s position that the only coverage is for alleged consequential damage, not for the cost of repair or replacement of the product itself. In fenestration litigation, the damage component for “product replacement” can dwarf the cost of damage repair. The saving grace for CGL coverage had been the payment of defense costs, but of late this has benefit has eroded as well.

Still, excess coverage is available and important for major loss protection. Here, it is critical to understand the notice requirements to maintain that coverage. Claims of a certain nature or demand size may require notice to the excess before there is an objectively reasonable justification for the trigger at the excess threshold. Know your reporting requirements and don’t give the insurer later leverage to negotiate against your interest.

Insurance issues also arise in the form of a contractual requirement in some builder contracts for product purchase due to the risk of installing a defective product into a structure later sold. The contract often stipulates that the manufacturer’s insurance must meet set contractual requirements. It is unlikely there will be a match. Consider not entering that contract without first delivering to the builder a Statement of Insurance accurately summarizing your insurance policies, as prepared by your broker.