Does Your Small Business Need Products and Completed Operations Insurance Coverage?
If you’re wondering just what risks are covered by products and completed operations insurance (and why you need it), you’ve come to the right place.
As a small business owner, you have a lot on your plate. So we’ll cut straight to the chase: if you’re seeking a short answer to the question of whether you need products and completed operations liability insurance, that answer is yes.
This coverage addresses one of the hazards that is normally insured under a General Liability policy. In addition to bodily injury and property damage that occur during the policy period, many policies include coverage for liability that arises from an insured’s products or business operations occurring after operations have been completed or abandoned.
As you might imagine, this coverage is a crucial component of your General Liability insurance policy. We’re providing answers to common questions about what this coverage encompasses, how much it costs, and how to select the right policy for your needs.
Who is held liable for product liability claims?
If you are a manufacturer or seller, you will be held liable for any damage to the customer that results from a defective product or service. Generally speaking, the law requires that any product you produce meets the ordinary expectations of the consumer, so any unexpected defect or danger resulting from your product means that it has not met this standard.
Is products and completed operations coverage included on every General Liability policy?
No, this coverage is not included on every policy. For example, many claims made policies—which only cover claims reported to the insurance carrier when the policy is in effect—do not include products and completed operations coverage.
Under an occurrence insurance policy, on the other hand, you are covered for incidents that occur when the policy is in effect, even if the claim is made after the policy period has ended. The General Liability policies arranged by Thimble are occurrence, not claims made.
Additionally, protection for covered claims that arise after the policy period from work completed during the policy period (also known as products and completed operations coverage) is provided under our policies as long as the occurrence takes place before the Exposure Period ends. The work must have been completed during the policy period for coverage to apply.
What types of incidents are covered under products and completed operations liability?
Here are a few examples of how products and completed operations coverage works in practice:
You’re doing makeup at a wedding during a five-hour policy period. One day after the policy period ends, the client breaks out in hives and demands that you pay their medical bills. The policy responds.
You build a deck during a seven-day policy period. Three months after the policy period ends, the deck collapses and someone breaks their leg and sues you. The policy responds.
You DJ a house party during a three-hour policy period with your own equipment. A week after the policy period ends, the owner of the house is setting their normal sound system back up and a fuse blows. They sue you for the damage, and the policy responds.
You complete a personal training session during a one-hour policy period. The next day, after the policy period ends, the client is reaching for something on a high shelf and throws out their back. They sue you, claiming that you overworked them during your training session and caused the injury. The policy responds.
You photograph a wedding during a five-hour policy period. Several months after the policy period ends, you send the client their favorite print from the day and spray it with a musk fragrance. The client has an allergic reaction to the scent and breaks out in hives. They sue you and the policy responds.
You clean the floor of a client’s home during a one-day policy period. The next day, after the policy period ends, someone slips on the floor and breaks an arm. They sue you and the policy responds.
You install an irrigation system in a client’s garden during a five-day policy period. You forget to turn the water off, and a few days after the policy period ends, there is flooding in the garden that leads to property damage. They sue and the policy responds.
You’re walking a client’s dog during a one-hour policy period. You’ve been instructed to lock the dog in its crate when you return, but you don’t properly lock the crate and the dog gets out. After the policy period ends, the client’s housekeeper enters the house and the dog bites her. The housekeeper sues and the policy responds.
It is generally recommended that contractors take out a General Liability policy that includes an aggregate limit of $1 million for products and completed operations coverage. The policies arranged by Thimble include coverage up to this limit for products and completed operations coverage during the Exposure Period. Certain restrictions apply—refer to your policy for details.
Can I take out liability insurance per job?
With Thimble, you can! Our General Liability coverage can be purchased by the hour, the day, the month, and all the way up to a year. Whether you are a musician who needs coverage for a two-hour gig or a contractor looking for a three-month policy, our General Liability insurance is built to accommodate your unique needs.
How much does product liability insurance cost?
In contrast to annual insurance coverage, which can cost hundreds or even thousands of dollars depending on your industry, our on-demand General Liability coverage starts at as little as $5 for an hour-long policy. So get insured, and get back to the work that matters!
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.