Author: Nancy Germond

An April 2022 decision by the Massachusetts Supreme Judicial Court ruled on the scope of coverage under a commercial general liability (CGL) policy. The results were damaging to the insured. In this case against the owner and operator of a Super 8 motel, the Union Insurance Company policy listed the named insured and address as “Dipika, Inc. DBA Super 8," and listed its address as 655 Washington Street, Weymouth, MA. The declarations page listed “motel" as the business description, and the business form was “corporation." The classification for that sole location was “45192 – Hotels and Motels – without pools or beaches, less than four stories."

The insured contracted to convert an upper floor of the Masonic Temple into a trendy hotel. While working on the project, several workers caused a fire while cutting metal. This fire caused major damage to the Masonic temple. When the Mason's property carrier paid for only about half those damages, the Masons filed suit against Patel and Dipika. Union Insurance Company denied the claim and filed a motion for summary judgment in Superior Court, which the court affirmed.

This case went up on appeal. The Supreme Court ruled that while fire losses could qualify as insured losses, Dipika's policy did not cover losses arising from the Masonic fire. The meaning of “doing business as Super 8," the court stated, and those activities at the Masonic Temple were “of a different scope and nature from those of Super 8." The court said that any other decision would mean that the “DBA Super 8" was unnecessary.

Craig Stanovich does a great job of detailing this DBA issue at this link. He also covers dissent on this important decision.

There is another takeaway here. During COVID, many contractors moved into other specialties to smooth income or take advantage of new opportunities for revenue. Changes in your insureds' operations and specialties create coverage issues. For example, a handyman that decides roofing is a great idea after a tornado can create coverage problems. It's a great idea to remind your artisans and contractors that they should immediately notify you of any material change they make in their operations or their class of business.

Now back to trade names and DBAs. According to Stanovich, “Think twice about listing trade names or DBAs in their [the insured's] CGL."

Here is an article by Chris Boggs covering the issue of DBAs, with also contains a link to his previous article on this subject. Here's one of his key takeaways. “Because the DBA is not necessary to effectuate coverage and because including of the DBA may actually, though unintentionally, harm the insured, carefully consider the possible ramifications if the decision is made to list the DBA. When and where possible, don't grant these fictitious entities status as a “you."

There is also a video available in our Lightning Learning sessions. This video covers how to properly name your insureds. It's only 22 minutes long, and well worth the watch.

First published: July 22, 2022