Commercial General Liability: Products & Completed Operations Liability Explained (2025)
COMMERCIAL INSURANCE
12/11/20242 min read
A business needs Products & Completed Operations Liability when it sells products or provides services that could cause harm or damage after the product is sold or the service is completed. This can be included in your Commercial General Liability (CGL) insurance.
Here’s a simple guide to understanding when and why a business needs Products & Completed Operations Liability coverage:
1. Businesses That Sell Products
If your business sells, manufactures, distributes, or even just resells products, you need this coverage. It protects you against claims arising from:
Defective Products: If a product you sell malfunctions or is unsafe.
Contamination: If food or beverages cause illness.
Failure to Warn: If a product lacks proper usage instructions or safety warnings.
Examples:
A manufacturer of ladders faces a lawsuit because a defect caused one to collapse, injuring a user.
A restaurant serves undercooked chicken that causes food poisoning.
A retailer is sued because a defective toy they sold injured a child.
2. Businesses That Provide Services or Complete Projects
If your business provides services, especially those involving physical work, you need this coverage to handle claims after the work is done. It protects against:
Improper Installation or Construction: If the work you completed fails or causes harm.
Faulty Repairs: If a repair leads to injury or property damage.
Examples:
A roofing contractor completes a project, but a leak develops months later, damaging the client’s home.
An electrician installs wiring that later causes a fire.
A plumber’s repair job results in a burst pipe after completion.
3. Specific Scenarios Where This Coverage Is Needed
A. Products You No Longer Control
Once a product leaves your possession, you have little control over its use or potential hazards.
Example: A skincare company sells lotion that causes rashes due to an undiscovered allergen.
B. Completed Work You No Longer Supervise
Even high-quality work can lead to issues after completion due to unforeseen factors.
Example: A contractor installs HVAC equipment, but incorrect settings cause a system failure months later.
C. When You Want to Sign Larger Contracts
Many clients, especially in construction or product distribution, require proof of Products-Completed Operations Liability before awarding a contract.
Example: A general contractor might demand this coverage from a subcontractor to protect against future liability claims related to completed work.
4. Why Is This Coverage Critical?
A. Financial Protection
Without this coverage, your business could face devastating financial losses from lawsuits or claims related to your products or work.
B. Legal Requirements
Some industries or jurisdictions may require this coverage to operate legally.
C. Business Reputation
Quick resolution of claims through insurance helps preserve your business’s reputation, ensuring customer trust and loyalty.
5. Industries Where This Coverage Is Essential
Manufacturing:
Product defects, contamination, or improper labeling can lead to major lawsuits.
Construction:
Completed projects can result in structural failures or safety issues.
Retail and Wholesale:
Even though you didn’t make the product, selling it still exposes your business to liability.
Food and Beverage:
Spoiled or contaminated products can lead to illness and legal claims.
Repair and Installation Services:
Poor workmanship or improper installation can cause accidents or property damage.
In Summary
Your business needs Products & Completed Operations Liability if:
You sell products (even if you didn’t manufacture them).
You provide services or complete projects where potential risks remain after the job is done.
You want to protect your business from lawsuits and financial loss related to products or completed work.
This coverage is like a post-sale or post-project safety net, ensuring that your business stays secure long after the initial transaction is complete.
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