Home Environment Inc. (HEI) is insured under a CGL that includes the following coverage limits:

• Each occurrence limits $1,000,000

• Damages to premises rented to you 100,000

• Medical expense limit 5,000

• Personal and advertising limit 1,000,000

• General aggregate limit 2,000,000

• Products & completed operations aggregate 2,000,000

HEI was installing central air conditioning in the Smith house. During the duct installation, HEIs apprentice technician damaged electrical wiring. The fire destroyed HEIs compressor, caused major damage to the Smiths house, and also caused bodily injury to Mr. Smith as he was helping his family escape the burning house.

HEIs insurer had already paid $800,000 in claims under HEIs CGL coverage for occurrences during the same policy period as the Smith claim.

a. Is there coverage for the property damage to HEIs compressor and the Smith house and for the injury to Mr. Smith under the CGL policy? Explain your answer.

b. After the CGL limits of insurance are applied, what amount is available under HEIs CGL policy to pay damages associated with this claim?

c. The Smiths retain an attorney and file suit against HEI. Are the insurers legal expenses covered? And if so, are the expenses in connection with this suit deducted from the policy limits?