(USA Herald) – This is the case of MB Developers Inc. v. Assoc. Indus. Ins. Co. Inc. et al., in the U.S. Court of Appeals for the Ninth Circuit.
When it comes to insurance claims, policyholders often find themselves at a disadvantage when dealing with insurance companies. In a recent case, a real estate developer, CMB Developers Inc., was denied coverage by their insurer, Associated Industries Insurance Co. Inc., over damages caused by a faulty fire suppression system. The Ninth Circuit ruled in favor of the insurer, stating that the decision of where to place the sprinkler is considered installation and is excluded from its commercial general liability policy.
According to investigative paralegal, Samuel Lopez from the USA Herald, this case is a prime example of how insurance companies can use policy exclusions to deny coverage for damages that policyholders believe should be covered. In this case, the “designated operations” exclusion and the “Exclusion — Total Professional Services” were used to deny coverage for the property damage caused by the malfunctioning sprinkler system.
CMB Developers sought coverage from AIIC after the fire sprinklers went off in a house purchased, remodeled and sold by the developer, despite there being no fire. The homeowner filed suit against the developer, alleging that there was extensive water damage because of the malfunctioning sprinkler system. The lower court determined that the work done by Radix Fire Protection Inc., which was hired by CMB to assemble and install the system, still fits under a reasonable interpretation of “installation” and thus the exclusions apply.
Additionally, the Ninth Circuit also affirmed that the insurer didn’t act in bad faith. CMB Developers accused AIIC of wrongfully delaying its defense, but the appellate court agreed that the delay was based on a genuine dispute over whether the designated operations exclusion precluded coverage and therefore was reasonable.
This case highlights the importance of policyholders being aware of the exclusions in their insurance policies. Many policyholders may not fully understand the implications of these exclusions, and may find themselves in a similar situation as CMB Developers. Policyholders should not only be aware of these exclusions but also have an understanding of the legal language used in their policies.
In conclusion, the Ninth Circuit’s ruling in favor of the insurer, Associated Industries Insurance Co. Inc., in the CMB Developers Inc. v. Associated Industries Insurance Co. Inc. case is a prime example of how insurance companies can use policy exclusions to deny coverage for damages that policyholders believe should be covered. Policyholders must be aware of the exclusions in their insurance policies, and have an understanding of the legal language used in their policies to avoid similar situations.
For more information on this case, and others, you can read the articles written by Samuel Lopez, an investigative paralegal with the USA Herald, on our website: www.usaherald.com/