Completed operations coverage: Do you have it? You should check again.
Are you sure your project has completed operations coverage?

You may want to check again, as two recently ruled cases show how contractors can be caught completely unaware. We analyzed two cases settled in 2018 to help contractors understand how the verbiage of the endorsements in your additional insured contract as either a GC, or a sub, can eliminate completed operations coverage, and how the non-insurance contract between a GC and sub can be the source of critical miscommunications which leaves all involved uncovered.

  1. Make sure you or your broker carefully reviews all the additional insured endorsements on a project. Pay particular attention to the time period covered by the endorsement.
  2. If you are a general contractor, make sure your sub-contracts match the requirements laid out in the Major Contract. If there is a discrepancy, it is likely you will foot the bill.
  3. Do your Certificates of Insurance match the requirements outlined in the Master or sub-contract? Carefully review both yours and your partners’ contracts to make sure you are covered.

In Pulte Home Corp. v. TIG Insurance Company, 2018 U.S. Dist. LEXIS 83558 (S.D. Cal. May 16, 2018) (California law), a case involving construction defect claims on behalf of various home buyers, the Court held that no coverage existed for the general contractor under its sub-contractors’ insurance because all of the additional insured endorsements explicitly limited coverage to “potential liabilities that arose while construction was in process, and not for liabilities that manifested after the subcontractors’ operations were complete,” as was the case here.

In Great Divide Insurance Company v. Amerisure Insurance Company, 2018 U.S. Dist. LEXIS 41443 (S.D. Fla. March 14, 2018) (Florida law), the Court held that no coverage existed under a sub-contractor’s policy for either the sub-contractor or the general contractor for the injuries sustained by a customer who tripped and fell over an ADA ramp recently built by the sub-contractor at a newly constructed Cumberland Farm’s convenience store, due to the lack of completed operations coverage.

The Court noted, among other things, that:

  1. The Major Contract governing the general contractor’s work in building the store required that the general contractor “and any subcontractors” procure, among other types, “products and completed operations” insurance;
  2. The sub-contract, however, only required that the sub-contractor procure “insurance throughout the entire performance of this agreement,” i.e., for its ongoing operations; the sub-contract did not require the sub-contractor to purchase “completed operations” insurance;
  3. The certificate of insurance issued to the general contractor did not state that it covered completed operations; and,
  4. The sub-contractor’s insurance policy contained an endorsement (“Contractor’s Blanket Additional Ensured Endorsement’) that specifically provided “completed operations” coverage but only upon the satisfaction of two conditions: (1) the contract establishing the additional insured status itself required the procurement of “completed operations” coverage, which it did not, and (2) such coverage was specifically listed in the certificate of insurance, which it was not.