Completed Operations Insurance

What is 'Completed Operations Insurance'

Completed operations insurance is an insurance product that covers the liability incurred by a contractor for property damage or injuries that may happen to a third party once contracted operations have ceased or been abandoned. Completed operations insurance contracts are applied to construction products or the manufacturing of consumer goods and medicines. This type of coverage is often covered under general liability insurance, but sometimes is purchased by a contractor/manufacturer over and above general liability to cover loss or injury that occurs off the insured's property.

BREAKING DOWN 'Completed Operations Insurance'

Purchasing completed operations insurance is a method of having a third party assume risks related to a contractor’s finished work. Even though a contractor’s work is completed, loss prevention and commercial insurance coverage are still needed to relieve him of liability expenses. For example, six months after a roofing contractor finishes work at a bank, melting snow enters through the roof and ruins multiple network servers. A railing that a metalworker installed collapses when a person leans on it. The person falls 10 feet and suffers severe back injuries. An overhead door closes on top of a car. The owner seeks damages from the contractor who installed the door.

Importance of Completed Operations Insurance

A completed operations insurance policy helps a contractor settle claims while maintaining the financial stability of his business. The coverage ensures damages or injuries resulting from the contractor’s work are compensated at a reasonable level. Carrying this type of indemnity insurance means punitive damages assessed by a court may be settled.

How Completed Operations Insurance Works

The insurance company provides the contractor with legal defense and pays for any settlement or judgment resulting from accidents related to completed work. For example, the company pays for the restoration, repair or replacement of property when the contractor performs work incorrectly. The extent of coverage may address defects in the materials used to build the structure, or malfunction of the electrical or other internal system resulting in damage to the building or an occupant of the building. Some policies cover the contractor’s failure to provide owners fair warning about properly maintaining and managing the building and its systems.

Example of Completed Operations Insurance

A customer claimed a contractor’s negligent repairs to his residence resulted in bodily injury. The injury occurred at a location away from the premises, arose from the contractor’s work and happened after the work was finished. The insurance company covered the customer’s claim.

RELATED TERMS
  1. Contractors Professional Liability ...

    Liability insurance that provides coverage to contractors and ...
  2. Contractors' All Risks (CAR) Insurance

    An insurance policy that provides coverage for both damage to ...
  3. Controlled Insurance Program (CIP)

    An insurance policy which consolidates coverage for contractors ...
  4. Bid Deduct

    A feature of an owner controlled insurance program (OCIP) in ...
  5. Independent Contractor

    A self-employed taxpayer that controls his or her own employment ...
  6. Certificate Of Insurance

    A document issued by an insurance company/broker that is used ...
Related Articles
  1. Personal Finance

    Do You Need Casualty Insurance?

    Find out how different types of coverages can protect you and which policy is right for you.
  2. Entrepreneurship & Small Business

    Should You Hire Contractors or Employees for Your Small Business?

    Learn the pros and cons of hiring independent contractors instead of regular full-time employees. Find out about a potential risk for severe tax penalties.
  3. Personal Finance

    How Not To Get Scammed By Contractors

    Home improvement is a $200 billion a year industry. This means a lot of people get into the field that are likely less than qualified.
  4. Personal Finance

    Insurance Coverage: A Business Necessity

    Don't go to work without this policy in place - especially if your work is in your home.
  5. Financial Advisor

    What Kind of Insurance Do RIAs Need?

    Advisors spend a lot of time discussing insurance with clients but they also need to consider their own coverage needs as small-business owners
  6. Personal Finance

    Cover Your Company With Liability Insurance

    Every business is susceptible to legal action. Find out how to protect yours.
  7. Personal Finance

    The Purpose Of The W-9 Form

    Businesses use IRS form W-9 to gather information from vendors they hire as independent contractors.
  8. Personal Finance

    Filling The Gaps In General Liability Insurance

    Standard liability coverage may not be enough. Special needs call for specialized policies.
  9. Personal Finance

    The Importance Of Property Insurance

    Property insurance is important, but there's a lot you need to learn in order to get the proper coverage.
  10. Personal Finance

    10 Things You Should Know About 1099s

    Independent contractors receive 1099 forms, rather than W-2s, as a record of income earned. Here are 10 important things to know about 1099 forms.
RELATED FAQS
  1. Do contractors require subrogation clauses for their contract workers?

    Discover if general contractors require subrogation clauses when hiring contract workers and what form documents are most ... Read Answer >>
  2. What are some examples of industries that practice price discrimination?

    Understand the various types of insurance coverage offered in the insurance marketplace, and learn why each policy should ... Read Answer >>
  3. When does it make sense to buy personal liability insurance?

    Protecting yourself from lawsuits is important to the financial well-being of you and your family. Is personal liability ... Read Answer >>
  4. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  5. Does renters insurance cover water damage?

    Learn how renters insurance provides personal property coverage for items damaged by water only if the water is the result ... Read Answer >>
  6. Does renters insurance cover personal injuries?

    Learn what kind of coverage renters insurance provides against personal injury, and find out how to get discounts when shopping ... Read Answer >>
Trading Center