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Business-risk exclusion is an exclusion clause in commercial general liability policies. Business-risk exclusion excludes coverage for common risks of doing business, including:
1.harm to an insured’s product or work;
2.damages arising from a product recall;
3.damages arising from an insured’s failure to perform under a contract; or
4.damages arising from the failure of an insured’s product to perform as intended.
Generally, business-risk exclusion does not provide coverage to business manufacturers if a product does not meet the advertised standards . The purpose of business-risk exclusion is to help an insured control predictable risk.
In Am. Modern Home Ins. Co. v. Reeds at Bayview Mobile Home Park, LLC, 176 Fed. Appx. 363, 371-372 (4th Cir. Md. 2006),the court held that the purpose of exclusions for damages to an insured's work out of which an accident arises, is to remove any obligation of the insurer to pay for the repair or replacement of a policyholder's own defective work. Conversely, it is equally well established that such business risk exclusions permit coverage for damages to other property or for other accidental loss caused by the defective product or defective work.