8.10 Products

• Jurisdiction: Arizona

? Products-Completed Operations Exclusion

In brewer v. Home insurance co.,^[424] gary brewer was injured when a large metal trash pipe collapsed. The pipe was designed and manufactured by the insured. Brewer filed suit claiming that the insured negligently failed to provide adequate installation advice or negligently failed to warn of the need for bracing of the product while being installed. The insured sought coverage under their general liability insurance policy. The insurer denied coverage based on the argument that the "products hazard" and "completed operations hazard" exclusions contained within the policy.^[425]

The Arizona Court of Appeals in Brewer held for the insurer that coverage was precluded because of the "products hazard" and "completed operations hazard." The court stated that "the purpose of the products hazard exclusion is to exempt products liability claims made against the insured from liability coverage."^[426] The court observed, "where products hazard coverage is excluded, the insurer is not responsible for the failure of the insured's products or goods to work as anticipated."^[427] The court further stated that the exclusion was not limited strictly to the product itself but also those services so "intrinsically bound up in the sale of the [product] itself that they were part of the product within the meaning of the products hazard exclusion."^[428] The court found that the collapse of the pipe, causing the injury to brewer, occurred as a result of the insured's negligence. Thus, the court held that "the negligent instructions pertaining to the installation of a product and a failure to warn of danger in connection with the installation of a product are claims falling within the products hazard exclusion."^[429]

Brewer observed that there was some authority indicating that a failure to warn can fall outside of the exclusion.^[430] However, the court distinguishes those cases because the products at issue were not defective in and of themselves.^[431] To reiterate, the injured parties in this case claim that the "product" was itself defective and it was because of this defectiveness that they had failed to be warned. Thus, in the same way, these cases are distinguishable from the present case as well.

Expanding on Brewer...