California Property & Casualty Broker-AgentCasualty InsuranceMedium
A general contractor in California has a Commercial General Liability (CGL) policy. They complete a construction project, and six months after the project is finished and accepted, a section of the roof collapses due to faulty workmanship. The CGL policy includes a 'Products-Completed Operations Hazard' coverage. What is the primary purpose of this specific coverage?
- ATo cover bodily injury or property damage that occurs away from the contractor's premises and arises out of their work, after that work has been completed or abandoned.
- BTo cover liability arising from the contractor's ongoing operations at the job site.
- CTo cover damage to the contractor's own tools and equipment used during the project.
- DTo cover property damage or bodily injury occurring while the contractor is actively working on the project.
Show answer & explanationAnswer & explanation
Correct answer: A. To cover bodily injury or property damage that occurs away from the contractor's premises and arises out of their work, after that work has been completed or abandoned.
The Products-Completed Operations Hazard coverage is crucial for contractors as it addresses liability for bodily injury or property damage that occurs after the work has been completed and the contractor has left the job site. This covers latent defects or issues that manifest post-completion.
Why the other options are wrong
- B. This also describes 'Ongoing Operations' coverage.
- C. This would typically be covered under an Inland Marine policy or a specific property coverage, not CGL.
- D. This describes 'Premises Operations' or 'Ongoing Operations' coverage.
Products-Completed Operations Hazard
CGL coverage for bodily injury or property damage occurring away from the insured's premises and arising out of their work, after that work has been completed or abandoned.
- Covers liability for defects or failures that manifest after a job is finished.
- Essential for contractors, manufacturers, and service providers.
- Distinguished from ongoing operations coverage which applies during the work.
Memory trick: Remember, 'Completed Operations' means the job's done, but the liability isn't!