Completed Operations Coverage: Obligations for Contractors

What is Completed Operations Liability Insurance?

Completed Operations Liability insurance is included in most Commercial General Liability Insurance (CGL) policies. It pays for damages caused by your work that occur after you finish a job. This type of coverage is particularly important for construction companies working on long-term projects with a high risk of property damage or injuries. Completed Operations Liability insurance protects against lawsuits and helps cover the cost of damages.

What Does Completed Operations Insurance Cover?

Completed Operations insurance covers damages resulting from your completed work, whether it’s a product or a service. This means that if a product or service you provide causes property damage or bodily injury after completion, your Completed Operations Liability insurance will cover the cost of damages. For example, if a construction company completes a building and a fire starts due to faulty electrical work, Completed Operations insurance would cover the cost of damages caused by the fire.

Obligations of Contractors and Construction Companies

As a contractor or construction company, it is vital to understand your obligations regarding Completed Operations Liability insurance. First and foremost, you must ensure that you maintain this insurance coverage for a finite period, typically in the one- to five-year range, after completion of your work. This is often a requirement in construction contracts, and failure to maintain coverage could result in breach-of-contract lawsuits.

Additionally, many construction contracts require subcontractors to provide insurance coverage for claims resulting from their completed work. It is essential to carefully review your contract and understand the insurance requirements before signing. As a subcontractor, you can be held liable for claims of property damage or bodily injury resulting from a defect in your work. Naming additional insured parties, such as the owner, architect, general contractor, and other third parties, is often required and requires a separate endorsement to the policy.

Reducing Risk with Completed Operations Insurance Coverage

Knowing local regulations and documenting proper performance is crucial to reduce the risk of a claim being filed against you for a defect in your completed work. Maintaining adequate documentation and records of all processes can help avoid litigation and satisfy your contractual obligations.

It is also important to work closely with your insurance company, such as CMB Insurance Brokers, to ensure that you have adequate insurance coverage and that your contractual obligations are met. In the event of a large claim, the cost of damages could be substantial and failure to meet your contractual obligations could result in significant legal and financial consequences.

Getting the Right Business Insurance

As a contractor or construction company, it is crucial to understand the importance of Completed Operations Liability insurance and your obligations to ensure that your business has adequate coverage. If you have any questions about this type of insurance or your obligations as a contractor, contact the experts at CMB Insurance Brokers.

With over 30 years of experience in the construction industry, our team can provide valuable advice on risk management and help you obtain the right insurance coverage for your business.

We also have deep expertise in Surety & Bonding and can issue bonding documents quickly. Don’t hesitate to give us a call to discuss your insurance needs and get the guidance you need to protect your business.