Supreme Court of Texas Declines to Adopt Incorporation Theory: But Destructive Repairs are Covered

Ruling on certified questions from the Fifth Circuit Court of Appeals, the Supreme Court of Texas has positioned the state as another jurisdiction to refuse to characterize mere incorporation of a defective component into a product or system as “physical injury” to property that would trigger coverage under a standard form CGL policy. The court also refused to narrowly apply the “impaired property” exclusion by rejecting the insured’s argument that the exclusion should be limited to those situations where the
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