The Insurance Services Office (ISO) has issued a Circular advising it will submit to Insurance Departments in various states proposed changes to the Designated Premises Endorsement. The changes are due in part to the Hawaii Supreme Court's decision in C. Brewer & Co. v. Marine Indem. Ins., 135 Haw. 190, 347 P. 3d 163 (Haw. 2015). (Full Disclosure - our office represented C. Brewer before the Hawaii Supreme Court). The Circular is here. (Download here).
Currently, the endorsement provides,
This insurance applies only to "bodily injury", "property damage", "personal and advertising injury" and medical expenses arising out of:
1. The ownership, maintenance or use of the premises shown in the Schedule and operations necessary or incidental to those premises; or
2. The project shown in the Schedule.
The Circular gives the background of the C. Brewer case. An earthen dam burst, killing 7 people and causing property damage downstream. Suits against C. Brewer included claims of "negligent corporate decisions." The policy's Designated Premises Endorsement listed the corporate headquarters in the schedule under "Premises," but did not list the dam.
In addressing the endorsement, the Hawaii Supreme Court ruled that the endorsement "provides coverage for injury and damage that occurs on premises not listed in the schedule if the injury arises out of the ownership, maintenance or use of a designated premises." The Court went on to state that the term "arising out of the 'use' of the designated premises requires that there be a casual connection between the injuries. . . and the designated premises."
One of the endorsement's revisions was to delete language specifically referring to injury or damage arising out of the "ownership, maintenance or use of the premises shown in the schedule":
This insurance applies to "bodily injury" and "property damage" caused by an "occurrence" that takes place in the "coverage territory" only if:
1. The "bodily injury" or "property damage":
(A) Occurs on the premises shown in the Schedule or the grounds and structures appurtenant to those premises; or
(B) Arises out of the project or operation shown in the Schedule.
Therefore, the proposed endorsement explicitly provides that "bodily injury" or "property damage" must occur on the premises shown in the Schedule or the grounds and structures appurtenant to those premises.