Product and Completed Operations (USA)

“Products and Completed Operations” is a key coverage component within a Commercial General Liability (CGL) insurance policy in the USA. It protects businesses against liability for bodily injury or property damage caused by their products or completed work, even after those products have left the business’s premises or the work has been finished.

Here’s a breakdown

Products Liability:

• Covers injuries or damage caused by defects in the products that a business manufactures, sells, or distributes.
• Applies even after the product has left the business’s control.
  • Example: A manufacturer is sued because a defective product they sold caused an injury to a customer.

Completed Operations:

• Covers injuries or damage arising out of work that a business has completed or abandoned.
• Applies to work done away from the business’s premises.
  • Example: A contractor is sued because faulty wiring they installed in a building caused a fire after the project was completed.

Why it’s Important

• Protects Against Long-Tail Claims: Claims can arise long after a product is sold or a job is finished. This coverage provides protection against these “long-tail” claims.
• Essential for Businesses: Crucial for manufacturers, contractors, retailers, and any business that sells, distributes, or installs products or performs work for others.
• Part of CGL: It’s typically included as a standard part of a CGL policy, but it’s important to review the policy wording to understand the specific terms, conditions, and exclusions.

Exclusions

While Products and Completed Operations coverage is broad, there are some common exclusions, such as:

• Damage to the product itself: The coverage typically doesn’t cover damage to the defective product itself.
• Recalls: Costs associated with product recalls are usually not covered.
• Intentional acts: Injuries or damage caused intentionally are excluded.

Global Perspective

While the specific terminology might differ, the concept of protecting businesses from liability arising from their products or completed work is relevant globally. Most countries have some form of product liability laws and businesses need insurance to protect against these risks.

Example

A bakery sells a cake that contains a foreign object, causing injury to a customer who eats it. The bakery’s Products and Completed Operations coverage would help cover the costs of defending against a lawsuit and any resulting damages.

Products and Completed Operations coverage is a critical component of CGL insurance, providing essential protection for businesses against potential liabilities arising from their products or completed work.