Masonry Magazine June 1993 Page. 25
Contractor’s Completed Operations Insurance
It is not to reimburse the contractor if the work must be re-done. Moreover, should your defective work cause a loss of use of property that has not been damaged physically, there is no coverage. For example, should the owner not be able to use the premises because of your defective work, no coverage is provided for this type of loss.
If you, the contractor, fail to complete your work on time, completed operations insurance will not pay for the building owner's lost business, even though the building owner may have a claim against the contractor for such loss. Again, the coverage is not designed to pay losses which really are business risks, such as failure to complete a project.
A "completed operation" doesn't always require a total departure of the contractor. Further work on the project of a minor nature may be required, such as periodic inspections, and the project will be considered essentially "complete," requiring completed operations coverage. In addition, lacking formal acceptance of the project by the owner doesn't mean the work is "incomplete." The point to be made is that insignificant activities yet to be performed do not prevent the work from being covered under completed operations liability. This is important, because some contractors misunderstand this coverage and believe if anything remains to be done, the work is protected under their premises and operations liability coverage and Completed Operations Liability coverage doesn't come into play.
Another aspect of these coverages is that it's advisable to purchase both the Premises and Operations and Completed Operations insurance from the same insurer. This will prevent a dispute over what is "completed" and what is "not completed" when different insurers are used for each coverage. Having one insurer eliminates the "gray area" and delay, since that insurer will be required to pay a covered loss under one or the other coverages.
A note of caution. Claims against you for injury or damage arising out of your completed projects can occur many years after you have left the project, requiring continuous coverage if you're to be protected. If you are a seasonal contractor and cancel your liability insurance in the off-season, including Completed Operations coverage, and a completed operations loss occurs, you have no coverage. Your insurance representative can arrange coverage for this exposure during the off season.
A similar problem occurs because now, many liability policies, including Completed Operations Liability policies, are being written on a "claims made" basis. This means the policy will respond to a claim that is actually made during the policy period. In this case, continuous coverage is needed.
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Glashaus Inc.
415 West Golf Road
Suite 13
Arlington Heights, IL 60005
708/640-6910 FAX: 708/640-6955