Broker Check

What's In A Trade Name?

July 27, 2022
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A recent ruling by the highest Massachusetts court denied coverage for a firm for activities beyond the "doing business as" in the policy name. The case, Masonic Temple Ass'n of Quincy, Inc. v. Patel was reviewed by Craig F. Stanovich of IRMI (https://www.irmi.com/articles/expert-commentary/do-trade-names-limit-cgl-coverage).

The insured, Dipika, Inc. was owned by Jay Patel who operated a Super 8 motel. The named insured was "Dipika, Inc. dba Super 8". When the insured was doing conversion work at a Masonic Temple, the insurer denied coverage for fire damage. The court gave the insurer summary judgement, the majority ruling that the policy only covered the motel operation.  A dissenting opinion held the named insured and business description did not limit coverage under the policy.

Unless there is a limitation to specified premises or operations, a Commercial General Liability policy is ´╗┐´╗┐intended to cover all of an insured's activities during the policy period. In Massachusetts at least that is limited if the insured uses a trade name or "doing business as" in its wording.

The best way to avoid this problem is to give underwriters prompt notice of new operations or entities during the policy period. (Newly acquired or formed organizations are automatically covered for 90 days or longer, depending on policy wording.) Underwriters should have the opportunity to review any change in an insured's activity. It's also a good idea to keep a business name separate from the "official" corporate, partnership or individual named insured. For example, instead of "ABC Company trading as XYZ" list ABC Company separately from the trade name.