Completed operations insurance provides contractors with liability coverage for accidents that occur during or after a project, caused by the project itself. It expands protection beyond general liability coverage and can cover events not covered by it. The policy focuses on issues that arise once the project is complete and can protect contractors from losing money in lawsuits. The purpose is to settle claims without undermining the financial stability of the business and compensating damages or injuries resulting from the contractor’s operations.
Completed operations insurance is a type of insurance coverage often used to cover a contractor’s liability in the event an accident occurs during a project, or even after a project is complete, if the accident is caused by by the results of the project itself. While liability of this type is often included in a general liability policy, contractors may purchase completed operations insurance as a means of expanding the level of protection associated with a given project. This strategy makes it possible to cover events that may or may not be covered under the terms of general liability coverage.
The provisions within a completed operations insurance plan generally focus on issues that may arise once the project is deemed complete. It is not unusual for the text of the insurance contract to define what is meant by a completed operation or project. For example, the terms may specify that for an operation to be considered complete, both the contractor and the client must consider all covered operations to be complete and the client has taken possession of the premises. Many policies will also specify that, in addition to being complete, the building has been used for its intended purpose and that the injury in question arose from what would be considered standard and reasonable use.
As with many types of liability insurance, a comprehensive operations insurance policy can protect the contractor from losing a large amount of money in a lawsuit, or even a class action. The scope of coverage will vary, but often includes provisions that address issues such as defects in the materials used to construct the building. Policy provisions may also address a malfunction of the electrical system or some other internal system that damages the building or an occupant of that building. Some policies will even cover the contractor’s failure to give fair warning to owners about how to properly maintain and manage the building and its systems.
The underlying purpose of completed trades insurance is to ensure that the contractor can settle claims without undermining the financial stability of your business. At the same time, the insurance coverage also makes it possible for any damages or injuries resulting from the operations carried out by the contractor to be compensated at an equitable level. By carrying this type of indemnity insurance, any punitive damages assessed by a court can be settled, and the contractor can continue to operate the business. While completed operations insurance is expensive, one claim is often enough to justify the expense.
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