Stacy Berliner Comments on Recent Ohio Supreme Court's Decision Finding Faulty Product Parts Are Covered

Partner Stacy RC Berliner provided commentary for Law360’s Insurance Authority in an article discussing a recent Ohio Supreme Court decision in Motorists Mut. Ins. Co. v. Ironics, Inc. She also filed an amicus brief on behalf of United Policyholders. In the Law360 article, Stacy stated that the decision “is favorable for the numerous component manufacturing companies in Ohio.”

This week, Ohio’s highest court upheld a ruling finding coverage for a component part manufacturer when its faulty parts caused damage to another product.

In the underlying case, Owens-Brockway bought a steel byproduct called “tube scale” from Ironics. The tube-scale was incorporated into Owens-Brockway’s bottles. After the tube-scale was incorporated, it was discovered that it was contaminated with particles that caused Owens-Brockway’s bottles to break easily, and be unusable. The bottles had to be destroyed and Owens-Brockway sought costs for that property damage from Ironics.

Ironics sought coverage under its liability policies to cover the property damage caused by its defective product. Ironics’ insurer, Motorists Mutual, denied coverage arguing, among other reasons, that under the “integrated systems” rule, Ironics’ product could not cause damage to Owens-Brockway’s bottles because the new integrated product remains the insured’s product. The Court rejected this argument as contrary to the plain language of the policy.

In the article titled “Faulty Product Parts Are Covered Damage, Ohio Justice Says,” Stacy notes “the integrated systems doctrine is a made-up coverage defense not supported by the language of the policy.” She continued, “[t]he Ohio Supreme Court rejected Motorists’ attempts to rewrite the policy post-loss and upheld the bargained-for language in the policy, which clearly covered this loss.”

For more information on the case and to read the full article click here.