Defective Product Claim Did Not Allege “Property Damage” or an “Occurrence”

Catlin Specialty Ins. Co. v. Parks Indus., LLC, et al. (N.D. Ill., Jan. 21, 2015)

The policyholder was sued in the underlying action for damage arising out of defective auxiliary power units for tractor trailers. The action against the policyholder sought recovery of the purchase price of the units, installation and uninstallation costs, repair costs, total gross income lost for the use of the semi-trucks, layover payments made to drivers, lodging charges, loss of skilled drivers, and fuel charges. The insurer had issued two commercial general liability policies to the policyholder. The court held that the insurer did not have a duty to defend because the alleged damages were purely economic losses that did not meet the definition of “property damage.” The court also held that the insurer did not have a duty to defend because there was no “occurrence” since the mere failure of a product is not beyond expectation and is foreseeable.