Masonry Magazine June 1993 Page. 23
Completed Operations Liability
Anyone engaged in construction, repair, installation, alteration and maintenance can ill afford not to have protection against completed operations exposure.
By HARRY F. BROOKS, CPCU, CLU claims can occur weeks, months or even years after the project is finished. The devastating potential for such losses can be demonstrated best by citing several cases involving losses. Assistant Dean, Miami Miami University, Oxford, Ohio.
REMISES and operations liability coverage of most contractors excludes liability arising out of an accident involving operations the contractor has completed or abandoned. This situation is best illustrated by a contractor who finished a job, removed all equipment and departed from the jobsite. Sometime later, some part of the construction project caused injury to several members of the public. It may have been the result of improper installation, defective workmanship, or similar problems arising out of the completed project. Premises and operations liability insurance usually doesn't cover such incidents.
Contractors often question why such losses are excluded from their premises and operations liability insurance coverage. To include it in all such liability insurance would increase the cost significantly for everyone. This occurs because some types of businesses, including some types of construction work, have a larger exposure with respect to liability arising out of completed operations, while others have a negligible exposure.
This variance in exposure makes the exclusion of coverage from the premises and operations liability insurance a much more equitable process by allowing those with the exposure to purchase the coverage separately and pay its cost, while those with a negligible exposure are not charged for coverage not necessarily needed.
Unfortunately, contractors and, occasionally, their insurance representatives don't understand how serious this potential exposure can be. This is because their attention is directed toward purchasing adequate liability insurance to cover accidents during the performance of construction work. With the completion of the construction project, little thought is given to the possibility that completed work can cause serious injury and damage to members of the public, and such.
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MASONRY-MAY/JUNE, 1993 23