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The 'Your Product' Exclusion: When CGL Coverage Ends at the Product Itself
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In December 2006, a building supply company in Shediac, New Brunswick sold 179 pieces of exterior vinyl siding to a residential property owner, with installation completed in July 2007. By June 2010, the siding had begun to blister and peel; the manufacturer replaced the defective sections at no charge. In 2012, the same failure recurred across the entire installation, and a contractor determined that all siding required removal and replacement.

The property owner commenced an action against the supplier in April 2013, claiming breach of contract and statutory warranty, and seeking $68,229.40 in damages. The supplier's commercial general liability insurer initially agreed to investigate but by October 2013 denied coverage, invoking a "your product" exclusion. The supplier contends the claim extends to collateral property damage—insulation, vapour barriers, structural components—that would fall within coverage.

Assessing the Insurer's Duty to Defend When Pleadings Allege Mixed Damages

When a commercial general liability insurer in New Brunswick receives a statement of claim that mingles allegations about defective product replacement with allegations about damage to other property, the insurer confronts one of the most consequential decisions in the claims-handling process: whether to accept the duty to defend. In Shediac, New Brunswick, this precise question crystallized after a residential property owner commenced an action against a building supply company over 179 pieces of siding that had failed, seeking $68,229.40 in damages. The pleadings alleged not only that the siding itself was defective and required replacement, but also that the failure of that siding had caused consequential harm to underlying structural components, interior finishes, and insulation that had nothing to do with the siding product. The commercial general liability insurer denied coverage, taking the position that the claim fell within the "your product" exclusion and that no duty to defend arose. The denial rested on a reading of the pleadings that characterized the entire claim as one for the cost of replacing a defective product. But the allegations were not so tidy. The pleadings spoke of water infiltration damaging sheathing, rotted framing members, and ruined drywall — property that was emphatically not the siding. The question of whether those mixed allegations triggered a duty to defend, notwithstanding the presence of excluded claims within the same action, sits at the heart of how insurers, insureds, and their counsel must approach coverage disputes when pleadings are drawn broadly.

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