What is Products and Completed Operations Coverage

When purchasing a general liability policy for a start-up or new business one can expect to pay anywhere between $400-$600.  This is primarily because the start-up has either low revenue or low occupied footage which are the two main rating factors for general liability.  Often, the price charged is actually a minimum premium from the carrier.  Some agents will suggest two methods of keeping cost even lower, especially if they are using a surplus lines carrier. They frequently suggest for a start-up to add a liability deductible or to exclude products and completed operations coverage.  

Very simply if you have a product or a completed operation, you need the coverage.  You have a product if you have a tangible item that is being sold.  Tangible is meant in its most cerebral manner and can include an electronic product such as software or an application.  Products liability coverage protects from damage resulting from the use of the covered product.  This insurance does not include product recall insurance which covers the cost of getting a defective product back under the control of the manufacturer or merchandiser.  You have a complete operation if you provide a service or skill that, after completed or abandoned, could cause damage. It normally applies to the construction industry but can also apply to other service individuals such as landscapers and installers of products. 

In many cases, a company thinks that its errors and omissions or professional liability coverage is sufficient for his risk exposure.  Products and completed operations will cover bodily injury and property damage whereas errors and omissions only covers a personal injury claim.  In addition, the products and completed operations coverage can come into play without a deductible.  Whereas your errors and omissions coverage will require you to front the cost in the form of a deductible.  Therefore, if you have a coverage or completed-operation, you definitely need this coverage and should not exclude it from your general liability.