Why Completed Operations Coverage is Essential for Contractors’ General Liability Policies
As an insurance agent working with contractors, you know how crucial it is to protect their businesses from the wide range of risks they face. While contractors understand the need for General Liability (GL) insurance, many overlook the importance of adding Completed Operations coverage to their policies. As a trusted advisor, you have the opportunity to educate your clients about how this crucial add-on can protect them long after they’ve finished a project.
What is Completed Operations Coverage?
Completed Operations coverage is an extension of a contractor’s General Liability policy. It provides protection from claims that arise after a project is finished. While a GL policy covers on-site incidents and injuries during the course of work, Completed Operations covers the contractor if something goes wrong after the job is done. This could be weeks, months, or even years down the road.
For example, imagine your client is a general contractor who installs electrical systems. Months after they’ve completed the project, a fire occurs due to faulty wiring. The property owner sues your client for damages. Without Completed Operations coverage, they could be responsible for paying out-of-pocket for legal defense and settlements.
Why Contractors Need Completed Operations Coverage
Many contractors believe that once they’ve left a job site, their exposure to risk ends. In reality, completed operations claims are all too common, and they can be costly. Here’s why Completed Operations coverage is essential:
- Long-Term Protection: Construction defects or failures can surface long after a project is completed. Without this coverage, contractors may find themselves facing significant financial liability for issues they thought were resolved.
- Litigation Costs: Legal fees can be astronomical, even if the contractor is not found liable. Completed Operations coverage helps cover these costs, protecting your client’s financial stability.
- Contract Requirements: Many contracts require contractors to carry Completed Operations insurance, especially for larger or more complex projects. Helping your clients meet these requirements keeps them in good standing and competitive in the bidding process.
- Building Client Trust: Contractors who carry this coverage signal to potential clients that they are responsible and committed to their work. Offering peace of mind in the form of long-term protection can help them win more business.
How You Can Help Your Clients
As an insurance agent, it’s your responsibility to ensure that your clients have the right coverage in place for their specific needs. Here are a few ways you can provide value:
- Educate Your Clients: Many contractors may not fully understand the importance of Completed Operations coverage. Take the time to explain how this protection works and the risks of not having it.
- Tailor the Coverage: Every contractor's risk profile is unique. You can help by customizing the policy to match their specific business operations, whether they are electricians, plumbers, general contractors, or specialists in another field.
- Highlight Potential Savings: While some clients may see this as an added expense, remind them that the cost of a claim can far exceed the cost of the coverage. Presenting Completed Operations as a preventative measure can help shift their perspective.
- Stay Updated on Industry Changes: Construction laws, regulations, and best practices evolve. By staying informed and updating your clients on these changes, you position yourself as a valuable resource they can rely on.
The Bottom Line
In a high-risk industry like construction, it's important for your clients to recognize that their exposure to liability doesn’t end when the job does. Completed Operations coverage provides vital protection for the work they’ve done and the reputations they’ve built. By emphasizing the importance of this coverage and helping them understand its value, you not only strengthen their business but also reinforce your role as a trusted partner in their success.