What is products and completed operations?
Products and completed operations refers to your protection against product or services liability claims under a general liability insurance policy. The coverage is also part of a business owner’s policy.
Lawsuits related to property damage and bodily injuries are common for small businesses. If a product or service at your business injures a person or property, you could face a lawsuit. General liability insurance covers such losses under the “products and completed operations” section of your policy.
When does products and completed operations coverage apply?
The first part of the protection (“products”) applies to companies that manufacture and sell products. The second part (“completed operations”) applies to companies that perform work or deliver services to customers.
What are the benefits of products and completed operations coverage?
Products and completed operations coverage delivers many essential benefits, including:
- Protecting company assets in the event a customer sues you to recover the costs of property damage or bodily injury
- Preventing business failures or bankruptcy when your assets are insufficient to cover a legal judgment
- Providing evidence of financial strength to help close business deals
- Satisfying banker expectations to fulfill your obligations to them
- Providing peace of mind to customers that you will make them whole in the event your product or service hurts them or damages their property
How are claims filed under the products and completed operations?
There are three required criteria to receive this benefit:
- Your customer must file a claim against you for bodily injury or property damage.
- The claim must link the asserted loss to your product or completed service.
- The property damage or injury must have happened after your product was no longer in your facility or possession, or after you completed the service.
What are the claim limits for products and completed operations coverage?
Your policy has both per-occurrence and aggregate limits. This means payment for a single incident will not exceed the per-occurrence limit and the payout for all claims and incidents will not exceed the products and completed operations aggregate limit.
Is there always protection available under this coverage?
Insurers do not pay for all types of property damage under products and completed operations coverage. Three specific types are excluded:
Damage to the product you sold to the customer: If the product you provided gets damaged, your policy would exclude coverage because it only applies to damage your product caused to your customer’s property or injury.
Damage to a completed service: This is similar to the prior exclusion. The insurer would provide no coverage in cases where the damage occurred to your completed work, not to another piece of customer property.
Damage to “impaired property”: This refers to customer property that has flaws or is unusable because it incorporates your defective product or service. If removing your product or service would restore the customer’s property to its original working condition, then your policy would provide no coverage for this loss.
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