Reference no: EM132829017

Case Study-Soda Company 

You are the claims adjuster for Insurance Company. One of your insureds, Soda Company, has suffered a loss. Soda Company is insured under a Commercial General Liability policy. Your job is to determine whether any of the exclusions to the CGL apply to Soda Company's loss.

Soda Company leases a manufacturing plant outside of Atlanta, Georgia. Soda Company manufactures and bottles a line of five different organic sodas. Early in 20XX, Soda Company's boiler began malfunctioning and didn't produce sufficient heat to sanitize the company's bottles. The problem with the boiler went undetected.

In March 20XX, Soda Company's malfunctioning boiler overheated, exploded, and started a fire. Two employees were severely burned by the hot water that spewed from the boiler when it exploded. Two additional employees were burned while attempting to put out the fire. The manufacturing plant was totally destroyed.

Soda Company's owners had a private jet that they kept in the warehouse of the manufacturing plant. The private jet was destroyed in the fire.

The week after the fire, retail stores began to notice that Soda Company's organic sodas had become moldy. The owners suspect the problem with the boiler earlier in the year caused improper sanitization of the bottles. Customers are unhappy and demand refunds for the sodas they had purchased. Retailers begin returning all of the sodas they have in stock. The owners of Soda Company are forced to recall all their sodas.

Determine whether the following losses are covered under Soda Company's CGL policy:

• The fire loss at the manufacturing plant
• The four employees who were burned
• The owners' private jet
• The recall of the organic sodas