In: Operations Management
this is an insurance class in university
Southeastern Growth (“SG”) sells road paving material to road builders. SG leased Diego’s asphalt plant in Waco, Texas in which asphalt was manufactured for sale. Raymond Saldana was an employee for SG working at the plant. On the day of the accident, Saldana was in the process of uploading a shipment of oil from a tanker truck into a reservoir tank. The oil is used in the manufacture of asphalt. The procedure is accomplished by the attachment of a hose from the truck to the reservoir. The oil is heated super hot which causes the oil to flow from the truck into the reservoir through the hose. Saldana had hooked up the hose to the truck and the reservoir and was supervising the procedure. The oil was heated and began to flow. Suddenly, the hose ruptured spraying hot oil onto Saldana causing serious burns.
Saldana sued Diego, the owner of the asphalt plant. He stated the hose supplied by Diego was defective causing his injury. Wilmette Insurance Co. issued the CGL policy covering Diego. The policy was in effect on the day of the accident. Wilmette was notified of the accident and the lawsuit in a timely manner by Diego. Wilmette stated the claim made by Saldana against Diego was not covered under the CGL policy. Saldana was awarded $1M by the court in his lawsuit against Diego. He then sued Wilmette claiming his claim was covered by the CGL policy.
1. According to the given case Mr. S who suffered from the damages or injuries due to the rupturing of the hose is an employee of SE. The accident happened in the workplace leased by SE which has been operated by the organization D for the production of asphalt. Mr. S sued against organization D for damages. The insurer W of the organization D denies the coverage of the accident under the commercial general liability policy.
According to W, it has entered into insurance obligation with the organization D. Mr. S is the employee of the organization SE for which the insurer W cannot process any claim.
2. Mr. S asserts that insurer W should provide CGL policy coverage as he had to suffer the bodily damage. The CGL has to provide coverage if there is any bodily damage at work place or commercial services.