What is productscompleted operations aggregate limit

However, those at high risk may need specialty insurance, like a standalone product liability policy. Business owners need to assess their risk to determine the coverage limits that make sense for them. Kimberlee Leonard specializes in finance and business insurance and has over 20 years of experience between being a financial consultant, insurance agency owner, and owner of a content marketing agency.

Sign up to receive more well-researched small business articles and topics in your inbox, personalized for you. Fit Small Business content and reviews are editorially independent. We may make money when you click on links to our partners. Learn More. What is Products-completed Operations Coverage? Products-completed Operations vs Standalone Product Liability Insurance Most small business owners find the products-completed operations coverage in their general liability sufficient for their needs.

How Products-completed Operations Coverage Works The products-completed operations coverage in a general liability policy is typically written on an occurrence basis, which means the policy must be in effect when the injury or property damage occurs. However, the general liability portion of the policy may kick in to pay for a third-party injury or property damage. What Products-completed Operations Covers When a business distributes a product, there is a risk that the product can create harm or damage to others.

Some claims covered by products-completed operations coverage include: Accidental contamination: For example, E. The four standard exclusions in completed operations coverage are: Damage to your product: Your products-completed operations coverage only kicks in for damage to property other than your product. However, if a busted hose causes flooding, your insurer will most likely cover the claim.

Damage to your work: Products-completed operations coverage also excludes damage to your completed work. For instance, imagine a carpenter completing a stairway that breaks under the weight of the client. That client might only sue for the damaged stairway. However, the claim may be covered if the client sues for other damage the broken stairway causes. Recall expenses: The costs associated with recalling defective products are not covered by products-completed operations coverage.

To be fully protected, a business would also need a specialty policy known as product recall insurance that will pay costs associated with getting a defective product off of store shelves. Products-completed Operations Coverage Limits Products-completed operations coverage in general liability insurance has an aggregate limit that is separate from the general aggregate limit. Who Needs Products-completed Operations Coverage?

Bottom Line Most small business owners face some product liability risk, which is why standard general liability insurance includes products-completed operations coverage.

Kimberlee Leonard Kimberlee Leonard specializes in finance and business insurance and has over 20 years of experience between being a financial consultant, insurance agency owner, and owner of a content marketing agency. A kitchen cabinet fell from the wall, injuring your client. It turns out you made one small mistake during the installation process, which led to the fall.

You call your insurance company. You canceled your general liability policy after retiring, but the policy had been in place when the cabinetry was installed. Products and completed operations coverage generally pays only if the bodily injury or property damage occurs during the policy period.

To be protected against completed operations claims, your general liability policy must be in effect at the time that the third-party injury or property damage occurs. Products and completed operations coverage only applies to work that has been finished. If something goes wrong, only the completed units that have been put to their intended use are covered under the completed operations portion of your general liability policy.

The other units that are still under construction? The completed operations portion of a general liability policy is intended to pay for the damage that results from your work, but not for the cost to repair and replace the resulting work. In the instance of the redwood deck, the completed operations coverage is designed to help pay for the bodily injuries sustained by the client when the deck collapsed. The products-operations completed aggregate limit — the most an insurer will pay for this specific bodily injury or property damage claim — is separate from the general aggregate limit.

Completed operations claims do not typically go against the general aggregate limit, which is the most an insurer will pay for all bodily injury, property damage, personal, and advertising injury claims. Why does this matter? One of these is the general aggregate limit for all general liability claims. The second pitcher is the completed operations aggregate limit.

If a firm is involved in any product manufacturing and sale, it could be the subject of a product liability claim. When a firm receives a product liability claim, it means that someone has filed a claim against the firm alleging that a product it made and sold is defective. The claim can say that such a defective product has caused bodily injury or damaged to the property. In another situation, the firm may not be involved in making or selling a product itself but performs work for someone else.

In this case, the company could be subjected to completed operations claim. In such a situation, someone could claim that the completed work is faulty, and it injured them or damaged their property.