What Is Completed Operations Coverage?

Completed operations coverage is a specific component of commercial general liability (CGL) insurance, designed to protect businesses from potential financial liabilities. This coverage addresses claims of bodily injury or property damage that occur after a business has completed its work or delivered a product, and that work or product has been put to its intended use.

Core Concepts of Completed Operations Coverage

Completed operations coverage applies to bodily injury or property damage that manifests after the insured’s work is finished or abandoned, and the client has taken possession. Claims stemming from this work can be covered even months or years after completion. The geographical location of the incident, whether on the insured’s premises or elsewhere, does not prevent coverage from applying.

This aspect of coverage is formally defined within a Commercial General Liability (CGL) policy as the “products-completed operations hazard.” The trigger for this coverage is the actual occurrence of the injury or damage, not the date when the work was performed or the product was manufactured. This acknowledges the “long tail” of liability that businesses can face.

For instance, if a faulty electrical wiring job causes a fire months after a contractor leaves the site, or a poorly installed plumbing system leads to water damage after the customer begins using it, completed operations coverage applies. It covers the resulting third-party bodily injury and property damage, as well as associated legal defense costs. However, it does not cover the cost to repair the faulty work itself.

Businesses That Benefit from This Coverage

Many businesses benefit from or require completed operations coverage due to the nature of their services or products. Businesses involved in construction, contracting, manufacturing, installation, and repair services are particularly vulnerable to post-completion claims. This includes general contractors, plumbers, electricians, roofers, and HVAC technicians.

These businesses deliver a finished product or service that, if defective or improperly performed, could cause harm or damage well after completion. For example, a manufacturer of consumer goods faces risks if a defect in a sold product later causes injury. Similarly, an IT service provider who installs complex systems could face claims if a system malfunction causes data loss or operational disruption months later.

Many construction contracts and client agreements often require proof of this coverage. This reflects its importance in managing long-term risk.

Completed Operations Versus Other Liability Coverage

Completed operations coverage differs from other liability coverages, particularly “premises and operations” coverage. Premises and operations coverage applies to bodily injury or property damage that occurs during ongoing business operations or on the insured’s premises. It covers risks during daily business activities.

For example, premises and operations coverage applies if a customer slips on a wet floor inside a business establishment, or if a worker accidentally drops a tool on a client’s property during an active construction project.

In contrast, completed operations coverage activates only after the work is completed or the product is delivered. Both coverages are distinct in timing and scope but are often bundled within a Commercial General Liability policy. Having both provides comprehensive protection, addressing different phases of a business’s liability exposure.

Illustrative Scenarios

Consider a roofing contractor who installs a new roof. Six months later, a leak develops due to faulty installation, causing water damage to the homeowner’s interior. Completed operations coverage addresses the property damage claim.

Another scenario involves a manufacturer selling an appliance that, a year later, malfunctions due to a defect, leading to a kitchen fire and extensive property damage. The manufacturer’s completed operations coverage responds to the property damage claim and any resulting bodily injury.

Similarly, if an HVAC company installs a new heating system, and a few weeks after completion, an improper connection causes a gas leak and subsequent explosion, completed operations coverage applies. This covers the resulting property damage and bodily injuries.