Completed-operations insurance covers bodily injury and property damage caused by defects in the completed work, including losses arising from damage that occurs during the operation of the finished product, usually provided for a term of 1 to 3 years after substantial completion. Owners must be aware that some design professionals do not carry completed-operations coverage on their general liability policies. However, most general liability insurers will agree to add completed-operations coverage without additional charge. Third parties cannot be added as additional insureds. Low policy limits need to be shared by several parties.
Coverage only applies to third-party liability.
There are several reasons cited in support of this exclusion. Some types of faulty workmanship will be covered by the applicable general liability policy or builders risk policy. Also, because design professionals are often in a position to control and eliminate many of the situations and factors that can directly cause faulty workmanship, the faulty workmanship exposure is often perceived as an uninsurable risk with respect to design professionals. For example, consider the following scenario. As the design-builder, Elm Street absorbs the increased costs and still completes the job on time and within budget.