As a business owner, you are exposed to multiple risks. Having the right policies in place can prevent legal action from occurring. If you sell different products, you need to know about products-completed operations insurance. This policy contains unique features compared to basic liability coverage.
Product liability coverage protects your business if you are sued by someone because they believe that your products caused them harm or damaged their property. Even if your business does not make or sell a product, you may still be held liable. Someone could make a claim alleging that you performed faulty service and your negligence caused bodily harm or property damage.
You should also be aware of potential strict liability and breach of warranty claims. Under strict liability claims, your business may be held liable even if there is no serious proof that you were negligent. Under breach of warranty claims, the claimant alleges that you violated a warranty you made at the time of sale. Without product liability coverage, you could lose your business if a serious claim arises.
Products-Completed Operations Coverage
Any claims due to your product or completed work are covered under bodily injury and property damage liability. Look at coverage A under the Standard ISO Commercial General Liability Form for more information. Most claims are covered unless they are excluded due to an endorsement. While filing the claim, the claimant must be able to prove that the bodily injury and property damage occurred because of your completed work. There should be a direct connection between your faulty product and the claimant’s injury. Also, the bodily injury or property damage in the claim must have taken place away from the premises that you own or rent. The product should no longer be in your possession, and all the necessary work should be completed.
Policy Limits
All claims are judged based on the Each Occurrence Limit and the Products-Completed Operations Aggregate limits. The aggregate limit is the maximum your insurer will cover for damages or settlements regarding your products or operations.
Possible Exclusions
Work Damage
Your policy will not cover claims for property damage related to completed projects. The work damage exclusion contains an exception for subcontractors. The exception protects contractors from claims related to defective work performed by subcontractors.
Product Damage
Your liability policy does not cover claims based on damage to any part of your products. For a claim to be covered, other property damage must occur.
Impaired Damage
Your liability policy excludes damage to any defective or unusable property because it contains defective work. You can restore the property by removing your defective work.
How Much Coverage Is Necessary?
The amount of product liability insurance you need is based on the type of products your company sells. Look at how many different products you sell, the number of parties involved in the production, and the volume of sales. The more products your company manufactures, the greater the likelihood that you will eventually produce a defective product.
Consult With Premier Risk LLC
One minor accident can turn into something major. Comprehensive coverage can protect your business in every scenario. If you have any questions about products-completed operations coverage, contact the experts at Premier Risk, LLC. We will help you find the right policy to protect your business.
