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What Is Products-Completed Operations Coverage?
Products-Completed Operations Coverage helps cover liability claims resulting from your business’ product or completed operations that were done away from your location. It can help cover claims that your business caused bodily injury or property damage.
You’ll find this coverage in certain small business insurance policies, like general liability insurance and a Business Owner’s Policy (BOP). Another name for this coverage is products and completed operations.
Who Needs Products-Completed Operations Hazard Coverage?
Manufacturers and Retailers
If your business manufacturers or sells a product, you could face claims if it causes bodily injuries or damages to someone else’s property. That’s why it’s important to make sure you have this coverage as part of your manufacturers insurance or retail insurance plan.
For example, let’s say your business sells power tools. A customer buys a circular saw to work on projects at their home. They end up suing your business, claiming it was a defective product and they cut themselves while using it. Products-completed operations insurance can help cover the costs to defend your business.
Contractors and Service Providers
Businesses that provide a professional service, like contractors, can face completed operations claims. These kinds of claims are for work done away from business premises that may be faulty and cause bodily injury or property damage.
For example, let’s say you’re a contractor and recently renovated a client’s kitchen. After finishing the work, your client sues your business because a cabinet fell and damage occurred to the wall. Products-Completed Operations Insurance can help cover the costs to defend your business in the lawsuit.
Other industries that can benefit from having products-completed operations coverage include:
Types of Products and Completed Operations Claims
There are three criteria claims must meet to be eligible for coverage:
- The claim is about your business’ products or completed work causing bodily injury or property damage.
- The injury or property damage occurred after the product is no longer in your business’ location or after you completed a service away from your location.
- The injury or property damage claim is linked to your business’ product or services.
There are exclusions on covered claims. So, not every claim made against your business is eligible for products-completed coverage. It won’t help your business if there’s:
- Damage while you’re completing a service. So, if you’re working away from your business and damage someone else’s property before you complete the service, this coverage won’t help you.
- Property damage to the product you sold to a customer. Your coverage only helps cover claims of injury or property damage to others, not the product itself. You’ll need commercial property insurance to help cover damage to your products.
- Property damage to impaired property. This means the person’s damaged property wasn’t in good condition before your business’ services started.
- Product recalls. If your business sells a product that needs to be recalled, the products-completed operations coverage will not apply to damages associated with that recall.
Be aware that there are aggregate limits for products-completed operations coverage. This means your insurer will only cover a certain amount of total losses during your policy period. So, if your aggregate limit is $1 million, you’ll be eligible for coverage up to that amount for the entire policy period. Once your business meets that limit, your insurer won’t provide products-completed coverage for additional claims until the next policy period begins.
Get a Quote Today
We know there are many ways to protect your business including insurance, bonds and even hold harmless agreements. Our specialists are here to help you. They’ll work with you to understand your business and get you the right coverages. So, if your business sells a product or service and needs products-completed coverage or any other type of business insurance, we can help.
Get a small business insurance quote today and learn more about how we’ve got your back.