Author: VU Faculty
A lawn maintenance company was hired to fertilize a residential client's lawn. The lawn was damaged by the application of the incorrect fertilizer and needed to be replaced. The carrier denied the claim based on the determination that the lawn was part of "your work" and excluded. Is this correct?
"A lawn care business owner puts fertilizer and weed control on lawn, he mixes the chemicals wrong and burns up the yard. His GL carrier is paying, but does not feel they should. The underwriter stating that GL coverage does not provide coverage for his work. I do not agree with decision. If GL coverage does not provide coverage for his work, including any property damage he causes, then what is covered under GL."
"I insure a lawn maintenance company that was hired to fertilize a residential client's lawn. The lawn was damaged by the application of the incorrect fertilizer and needed to be replaced. The carrier denied the claim based on the determination that the lawn was part of 'your work.' The company's denial letter states: 'The fertilizer you used on their lawn would be considered "property damage" to "your work." You were hired to fertilize the lawn, which was part of your work. This was damaged in the process, and therefore, would not be covered.' I'm struggling with the determination that 'your work' includes the lawn. Does his work include the lawn he was working on? Should damage to the lawn be excluded? Thanks! PS - I had another carrier using the same form cover a similar claim a year ago."
"I've been getting mixed responses from different insurance carriers on the following claims scenario: Lawncare contractor applies weedkiller/or pest killer to the grass that he mows and maintains for the insured and kills either a portion of the grass or all of it. Some insurance carriers are denying that claim saying the grass is his 'product' and some are saying there would be coverage provided. I would like to know if there is a standard or better answer based on a standard ISO policy."
There are two truths in the policy interpretation business: (1) just because an insurance company says a claim isn't covered doesn't mean it isn't covered, and (2) just because an insurance company says a claim is covered doesn't mean it is covered. In these claims, what's surprising is the neither company cited the pollution exclusion to deny coverage, which is itself refreshing. To address the pollution issue, the CG 22 93 12 07 should be used for lawn care services and the CG 22 64 11 85 for other services like pest control and crop spraying.
Note: These endorsements (CG 22 64 04 13 - PESTICIDE OR HERBICIDE APPLICATOR – LIMITED POLLUTION COVERAGE and CG 22 93 04 13 - LAWN CARE SERVICES – LIMITED POLLUTION COVERAGE) have been revised in the 2013 ISO CGL program. The endorsement titles have been revised to clarify that they provide a partial buy-back of the pollution exclusion, but other exclusions (as noted below) may still apply. See the "2013 Update" at the end of this article for details.
This question comes up pretty often and our consensus has always been the same. The CGL has several workmanship exclusions to avoid turning the policy into a warranty or performance bond. Most likely, one or more CGL exclusions apply to the losses.
If the damage occurs during the application, CGL exclusions j.(5) and/or j.(6) probably apply. All they require is damage to the property of others caused by the insured or a subcontractor. Exclusion j.(6) specifically mentions work that is “incorrectly performed” which would be the case where the wrong fertilizer was used.
If the damage takes place after the operation is completed, exclusion L. would apply. “Your work” is defined to include “Work or operations performed by you or on your behalf.” The spreading of the wrong fertilizer was the insured’s work and it resulted in property damage to a third party (their lawn) for which the insured is legally liable.
If the damage was considered to be akin to defective workmanship, a number of courts have found (erroneously in our opinion) that there has been no “occurrence” as intended by the policy and, thus, CGL coverage is not even triggered. If that’s the case, then whether the exclusions apply or not is immaterial.
A lawn care company should be fully aware of the potential destructive capabilities of the chemicals it uses. As a result, extra care is warranted to ensure that the proper chemicals and concentrates are used. This type of exposure is best suited for loss prevention as opposed to insurance.
"An insurance company says that in response to the pesticide/herbicide applicator coverage problem, they apply the CG 22 64 to all policies that engage in that operation to provide them with bodily injury and property damage liability coverage. I want to ensure that the insured would have coverage for if they killed a lawn with pesticide/herbicide should they have this form on their policy."
Some insurers cite Exclusions J.(5) or J.(6) if damage is done at the time of application or Exclusion L. if the damage arises from a completed operation. The CG 22 64 modifies Exclusion F. for pollution but not these exclusions. However, an argument that Exclusions J.(5), J.(6) and L. don’t apply is that the coverage under this endorsement would then be illusionary in that it implies the only impediment to coverage is Exclusion F. Therefore, I’d clarify this issue with the insurer then document it. In the meantime, we'll present this to our national Technical Affairs committee to see if it merits pursuing with ISO for clarification.
In 2011, the Big “I” national Technical Affairs Committee made the following request of ISO to change the language in two endorsements because we felt that the forms were misleading agents and insureds to believe that the endorsement extended coverage for this exposure:
The CG 22 64 – Pesticide or Herbicide Applicator Coverage and CG 22 93 – Lawn Care Services Coverage endorsements remove Exclusion f.(1)(d) from the CGL policy. However, neither endorsement modifies Exclusions j.(5), j.(6), or l. Many insureds, agents, and insurers mistakenly believe that this effectively provides coverage, for example, for damage to lawns or other plants caused by the negligent application of herbicides or other harmful products. Suggested solution: Simply add a statement that the endorsement does not modify Exclusions j.(5), j.(6), and l. so that the endorsement does not appear to provide illusory coverage.
ISO did not believe it was necessary or appropriate to revise the endorsements as suggested, but they ultimately agreed to revise the titles of these endorsements to generally indicate the "limited pollution" coverage aspect of the endorsements. As a result, in ISO’s 2013 general CGL program multistate revision, the titles were revised as follows: CG 22 64 – Pesticide or Herbicide Applicator –Limited Pollution Coverage and CG 22 93 – Lawn Care Services –Limited Pollution Coverage. These endorsements continue to provide limited pollution liability coverage, but do not modify the CGL “your work” or any other exclusions.
Last Updated: April 2013