Just because the project is finished doesn’t mean the risk is gone. For contractors and subcontractors, liability doesn’t end when the job site is cleared. In fact, claims for property damage or bodily injury stemming from completed work can surface months or even years after the work is done.
That’s where completed operations liability coverage comes in.
What Is Completed Operations Liability?
Completed operations liability refers to the coverage provided under a contractor’s Commercial General Liability (CGL) policy for claims that arise after the work is completed. This includes work done by the contractor or on the contractor’s behalf by a subcontractor. For example, if faulty wiring installed by an electrician leads to a fire six months after project completion, the general contractor could be held liable and the claim would fall under completed operations coverage.
Why Contracts Matter
Most construction contracts now include specific insurance requirements for completed operations. These contracts often require subcontractors to maintain this coverage for several years after the work is completed, usually between one to five years. They also typically ask subcontractors to name the general contractor, property owner, and architect as “additional insureds” on their policy. This ensures protection for all involved parties if a claim arises down the road.
Failing to maintain coverage through this period can have serious consequences, including breach-of-contract lawsuits. It’s important to understand that your insurance responsibilities don’t end when the final invoice is sent. You may still be financially responsible for incidents tied to your past work even if the project wrapped long ago.
The Hidden Costs of Claims
Even if a subcontractor is the one directly responsible for the issue, liability can ultimately fall back on the general contractor. Filing a claim under your CGL policy can lead to significant premium increases, making it even more important to ensure subcontractors are carrying the right insurance and endorsements.
Best Practices for Reducing Risk
- Understand your contract: Know what’s required of you, especially regarding insurance commitments after project completion.
- Keep documentation: Maintain records of subcontractors, project specs, and safety procedures in case issues arise later.
- Consult your agent: Work with your insurance professional to confirm that you have proper completed operations coverage and that all necessary parties are listed as additional insureds.
At McHugh Insurance Group, we help contractors understand and meet their coverage obligations during and after the build. Reach out today if you’d like to review your policies and reduce your post-project risk exposure.