Operations concerns work in progress such as constructing the steel for a bridge. Completed operations is the finished process or scope of work put into its intended use by someone other than another contractor.
The steel skeleton is an operation when the concrete subcontractor pours the decks. It’s a completed operation when traffic begins to flow whether or not the guardrails are functional.
Completed operations liability covers the consequences of faulty work, not damage to the faulty work, but bodily injury and property damage as a result of the faulty work. The steel isn’t covered but the car it lands on is.
Three tests must be met to secure completed operations coverage for a specific claim:
1. The bodily injury or property damage must arise from your work product or completed
operation.
2. The claim occurs away from insured premises – owned or rented.
3. The work must be completed or abandoned when the injury occurs.
The subcontractor exception can be difficult to understand:
1. The exclusion does not apply to work done by subcontractors.
2. The exclusion does not apply if the damage arises out of work by a subcontractor.
If your general contracting company installs an HVAC system incorrectly that burns the building down; your work will not be reimbursed by your insurance carrier, but the work of your subcontractors will.
If a subcontractor installed the faulty system, all the work will be reimbursed by your insurance company. Of course, your company will likely subrogate, that is sue, the subcontractor.
The best risk management technique for this exposure is only perform work within your expertise and subcontract the balance of the contract, and perform quality control inspections on your work and that of your subcontractors. Document specific work completed by your subcontractor. Test your materials and fix defects as you work on the project.
Make sure your work is completed correctly to your satisfaction before releasing the project for its final use.
