Definition of Products and Completed Operations Coverage in Business Insurance

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Products and Completed Operations Coverage

A general liability policy covers a business on numerous fronts. It protects them if a customer is injured and provides reimbursement if the commercial building gets damaged.

Products and completed operations, also known as products-completed operations protection, is another type of liability coverage. This covers hazards that take place away from the business’ premises once operations are completed.

The first part of this coverage, the products, is related to the creation and sale of a company’s products. The second part, the operations, represents coverage at locations like a home or other commercial entity. Specifically, it concentrates on items like installation and construction at locations outside of the business’ offices.

Products and Completed Operations Claims

To receive reimbursement under this form of coverage, the claim for affected individuals or groups must meet a trio of criteria:

  • It has to be for injuries or property damage related to installation or construction.

  • It must have happened after the products were taken from a business’ facility and the service was completed.

  • There has to be a link between the product or completed service and the incurred damage.

Benefits

Products and completed operations aren’t always included in a general liability policy. Depending on the insurer, it might be needed as a rider. In turn, the business will need to pay extra.

In this situation, the company needs to weigh the benefits of the coverage against the additional cost. Here are some of the advantages related to this protection:

  • Shields a company’s assets from liquidation to cover reimbursements.

  • Prevents a business’ failure or bankruptcy if available assets aren’t able to cover a legal decision.

  • It reduces a financial institution’s concerns about a business’ monetary condition.

  • It shows the level of a company’s strength. In turn, this establishes peace of mind among its customers.

Exceptions

Coverage under product and completed operations insurance isn’t total. There are some exceptions. For instance, there is a maximum payout established via per-occurrence and aggregate limits. Should legal judgments exceed these amounts, then the remainder must be paid out-of-pocket.

Coverage would also be denied if the damage happened due to impaired property. An example would be a defective service or product. If removing these products restores the customer’s environment, then product and completed operations coverage would be voided.