Question about an E&O exposure vs. Products exposure
Posted: Mon Apr 07, 2008 5:52 pm
Hello all,
We have a risk located in CA that is selling and installing wireless temperature monitoring systems in cold storage warehouses, hospitals, labs, restaurants, etc. The insured installs the devices at the client's location, and installs the monitoring software on the client's computer. If there is a fluctuation in temperature, the customer is notified via e-mail, cell phone, alarm, etc. Our insured performs no electrical wiring as the monitors include a battery with a two year lifespan.
Our insured develops the software that is used for their system. Design and manufacturing of the monitors is handled by a third party. The insured performs no other programming services for others and their software is not used for any product other than their own.
As they develop the proprietary software for their system, the insured believes that they have a Professional Liability exposure.
We feel that this would fall under a products exposure, as the software is part of the product that they are selling and installing, and they are not performing any type of programming or similar services for others. The policy we are proposing is on an ISO CG 00 01 12/07 form, with no specific professional liability exclusion, and the policy specifically names their temperature monitoring system as the covered product.
The insured is looking to be covered in the event that their system fails for some reason (either hardware or software), fails to notify the customer of the temperature change, their customer's products are damaged and our insured is named in a suit for the loss. Obviously, the manufacturer and installer of the refrigeration unit would come into play but the insured is concerned about being brought in on such a loss as the customer would otherwise been notified of the temperature change if the monitoring system did not fail.
Their customer contracts also state that the insured is not liable for any direct or indirect damage to products due to the system failing, and they are not assuming any additional liability by way of their contracts.
Any thoughts on this one?
We have a risk located in CA that is selling and installing wireless temperature monitoring systems in cold storage warehouses, hospitals, labs, restaurants, etc. The insured installs the devices at the client's location, and installs the monitoring software on the client's computer. If there is a fluctuation in temperature, the customer is notified via e-mail, cell phone, alarm, etc. Our insured performs no electrical wiring as the monitors include a battery with a two year lifespan.
Our insured develops the software that is used for their system. Design and manufacturing of the monitors is handled by a third party. The insured performs no other programming services for others and their software is not used for any product other than their own.
As they develop the proprietary software for their system, the insured believes that they have a Professional Liability exposure.
We feel that this would fall under a products exposure, as the software is part of the product that they are selling and installing, and they are not performing any type of programming or similar services for others. The policy we are proposing is on an ISO CG 00 01 12/07 form, with no specific professional liability exclusion, and the policy specifically names their temperature monitoring system as the covered product.
The insured is looking to be covered in the event that their system fails for some reason (either hardware or software), fails to notify the customer of the temperature change, their customer's products are damaged and our insured is named in a suit for the loss. Obviously, the manufacturer and installer of the refrigeration unit would come into play but the insured is concerned about being brought in on such a loss as the customer would otherwise been notified of the temperature change if the monitoring system did not fail.
Their customer contracts also state that the insured is not liable for any direct or indirect damage to products due to the system failing, and they are not assuming any additional liability by way of their contracts.
Any thoughts on this one?