Read your policy! That’s advice most insurance professionals give, and for good reason. If you’ve read previous blogs on this site, we not only ask you to please read your policy but read it carefully. We know our advice is taken because we’ll get questions like this: “I read my policy and most of it is about what isn’t covered. What’s left?”
There are many types of businesses requiring other liability policies. Architects and Engineers, Directors and Officers, Doctors’ Medical Malpractice, Errors and Omissions for all kinds of professionals including insurance agents, to name a few. General liability applies to all of these and more. It covers risks common to everyone in “general.” The professionals listed all have some risks in common. If a doctor has an office, a visitor can trip and fall on a recently waxed floor. That’s covered by general liability but the doctor’s negligent treatment of a patient is not. That risk requires medical malpractice insurance. The point is these things are excluded under general liability because they are best covered under a separate policy designed just for them. Worker’s Compensation, Commercial Auto Liability, and Cybersecurity Liability are further examples of separate specialized coverages all of which are excluded under General Liability.
By now it should be apparent why there are so many exclusions in your general liability policy. It’s not a stretch to say if general liability doesn’t exclude it, it’s probably covered.* However, these exclusions are not always clear-cut and can impact your business in a significant way. As a prime example, here’s one of the most important exclusions for general contractors.* It is often referred to as the “your work exclusion”:
- Damage To Your Work – “Property damage” to “your work” arising out of it or any part of it and included in the “products-completed operations hazard”. This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor. (COMMERCIAL GENERAL LIABILITY COVERAGE FORM, CG 00 02 04 13, page 5 of 18)
“Your Work” refers to the homes you build, renovate or add to. As a general contractor, most if not all of this work is done on your behalf by insured subcontractors. If some defect in their work later causes damage to the home or any part of it, the subcontractors’ general liability insurance will respond first. If the subcontractors’ limits aren’t enough, your policy will pay on an excess basis. This is why the exclusion has this important exception:*
- This exclusion does not apply if the damaged work…was performed on your behalf by a subcontractor. (Beware of general liability policies that attach any endorsement removing this exception. Without it, there is little or no coverage for products-completed operations if you are a general contractor.)
So, what does the “your work exclusion” ACTUALLY exclude? If you have employees that perform any construction work under your supervision, there is no coverage UNLESS this work is scheduled in your policy and an appropriate premium charge is made. This is necessary because work you perform yourself is your first, or primary responsibility. It means that any resulting damage must be covered by your policy first since no subcontractor was involved and therefore, no other policy is available.*
If you would like to discuss your general liability coverage needs with a professional insurance agent, give us a call at 866-454-2155 or contact us at info@rwcinsuranceadvantage.com.
Be safe!
(* Statements in this blog are not intended to modify or replace actual policy language. For a complete explanation of what is covered and what is excluded, please refer to your general liability policy, or discuss your coverage with a licensed insurance professional.)