Wednesday, September 4, 2013

No Coverage for Damage To Your Work

Did you know that your Commercial General Liability policy will not cover damage to property on which you are working?  Many businesses who work on customers' property do not know this, and it is often a major surprise at claim time. 

General Liability policies include two exclusions that create this gap:  Damage To Your Work and Damage To Your Product.  They are standard exclusions in just about all GL forms.

Now, while GL policies do exclude coverage for that specific property on which you are working, they will cover resulting damage to surrounding property.  For example, if you are cleaning a carpet and cause damage to it, your policy will not cover it.  If, while cleaning the carpet, you cause a spill which damages surrounding property, then your policy will cover the surrounding property.

Why do insurance companies do this?  Liability insurance is meant to protect you against the sudden and unexpected.  If you have your hands on something, then you should know how to do your work without causing direct damage.  This item is in your "care, custody and control," and you should be able to service it properly.  If you don't, then it's your loss.  If, while working, you accidentally knock over a priceless Ming vase, then the policy will respond.  Damage to the vase is sudden and accidental, and the vase was not in your care, custody and control.

The three C's are pretty big when it comes to Liability insurance.  One way to avoid this coverage gap is to purchase Care, Custody and Control insurance as an endorsement on your GL policy.  CCC, or Voluntary Property Damage, endorsements provide a small amount of coverage for property damaged while you are working on it.  Not all companies offer it, but it is worth considering if you frequently have your hands on other people's property.

Have you been caught in this coverage gap?