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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.

Understanding the Your Product Exclusion in Commercial General Liability Policies

A residential property owner in Shediac, New Brunswick discovers that the exterior cladding on their home has begun to warp, buckle, and separate from the underlying sheathing. The siding, 179 pieces purchased from a building supply company and installed by a contractor, appeared sound for several years before the first signs of failure emerged. What began as isolated sections of distortion eventually spread across multiple elevations of the structure, and by the time the property owner retained counsel and commenced an action seeking $68,229.40 in damages, the litigation named both the contractor who performed the installation and the building supply company that sold the product. The building supply company, carrying a commercial general liability policy, tendered the claim to its insurer expecting a defence. The insurer declined coverage, pointing to an exclusion that appears in virtually every commercial general liability policy sold in Canada: the your product exclusion. This exclusion, deceptively simple in its wording, sits at the heart of how liability insurance functions for businesses that manufacture, distribute, or sell tangible goods, and understanding its operation is essential for anyone who must evaluate whether a claim against a product seller will be met with an insurance response or a coverage denial.

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