Whether your business is a large manufacturing or a small independent contracting, you have a Products/Completed Operations Liability exposure. This is a risk of doing business, and Commercial General Liability insurance provides protection for this exposure. Perhaps the easiest way to gain an understanding of Products/Completed Operations Liability is by example.

Consider a business engaged in the manufacturing of a product, such as a bicycle manufacturer. The manufacturer has a legal duty to make bicycles free of defects. In this example, Product Liability is the legal responsibility of the bicycle manufacturer to compensate for injury resulting from defective merchandise that it has provided for sale. If the hand brakes fail and cause a bike rider to have an accident resulting in bodily injury, then the bicycle manufacturer will be liable for the damages. Manufacturers need Products Liability insurance to address a risk of this nature.*

Let’s stick with the bicycle as the core product and build on the example above. Whether the bicycle was sold through a box store (Walmart) or a local specialty bicycle shop, the vendor will likely be sued for damages by the injured bike rider. Since the vendor sold the defective product, the vendor may be the first party the injured rider sues for the damages. Products Liability insurance is designed to provide protection to the vendor for this type of risk.*

Contractors (such as painters, carpenters, electricians, plumbers, and mechanics) are legally liable for damages arising out of work performed. The insurance coverage which addresses this common exposure for contractors is called Completed Operations Liability insurance. Taking the above example one step further, let’s assume an independent bicycle mechanic serviced the bike days before the rider suffered the injury on the bike. It may be alleged that the mechanic did not properly tighten a bolt or screw, which contributed to the hand brakes failing and the resulting accident. If the bike mechanic purchased Completed Operations Liability insurance, this coverage would respond to such a claim.*

*Subject to policy terms and conditions.

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