When is an Operation Completed under the ISO CGL Policy?

A claim arises from a general contractor insured’s work. All work had been completed except the customer’s walk-through and acceptance.

Q: “We believe this constitutes a completed operation, but the CGL insurer does not believe it is completed until accepted. What do you think?”

A: “The answer is in the ISO CGL definition (emphasis mine):

‘Products-completed operations hazard’:

a. Includes all ‘bodily injury’ and ‘property damage’ occurring away from premises you own or rent and arising out of ‘your product’ or ‘your work’ except:

(1) Products that are still in your physical possession; or

(2) Work that has not yet been completed or abandoned. However, ‘your work’ will be deemed completed at the earliest of the following times:

(a) When all of the work called for in your contract has been completed.

(b) When all of the work to be done at the job site has been completed if your contract calls for work at more than one job site.

(c) When that part of the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project.

Work that may need service, maintenance, correction, repair or replacement, but which is otherwise complete, will be treated as completed.

b. Does not include ‘bodily injury’ or ‘property damage’ arising out of:

(1) The transportation of property, unless the injury or damage arises out of a condition in or on a vehicle not owned or operated by you, and that condition was created by the “loading or unloading” of that vehicle by any insured;

(2) The existence of tools, uninstalled equipment or abandoned or unused materials; or

(3) Products or operations for which the classification, listed in the Declarations or in a policy schedule, states that products-completed operations are subject to the General Aggregate Limit.

The work the contract calls for has been completed. The inspection and acceptance of the work is part of the upstream party’s rights and duties, not the contractor’s. The contractor is done. Even if the inspection calls for further service, correction, repair or replacement, the work itself is completed.

Also note that ‘work’ refers to ‘your work,’ which is also a defined term:

‘Your work’:

a. Means:

(1) Work or operations performed by you or on your behalf; and….

That means ‘your work’ does not include inspection and acceptance, which the upstream party performs after the work is done.”

Bill Wilson is director of the Big “I” Virtual University.

This question was originally submitted by an agent through the VU’s Ask an Expert Service. Answers to other coverage questions are available on the VU website. If you need help accessing the website, email logon@iiaba.net to request login information.