You’re a professional with years of experience. You take pride in your work and ensure your employees do, too. But even the most seasoned construction pro can make a mistake or two.
Improper installation, faulty materials, or just a bad day on the job….it can all result in damage to the work you’ve done.
And if your client comes after you for damages due to faulty workmanship, you may be asking yourself:
“Is this covered?”
The purpose of general liability insurance is to cover contractors if they are deemed liable for third-party bodily injury or property damages caused by an accidental occurrence.
But general liability is not designed to pay out for damages or injury that are caused by sub-par work on the part of a contractor or her/his workers.
Faulty workmanship is typically excluded from a standard GL policy.
While general liability has you covered for occurrences that are out of your control, you’re typically not covered for work that doesn’t meet standards.
There are a number of exclusions in a typical GL policy that exclude faulty workmanship, including:
Most GL policies include a clause excluding property damage that takes place while you (or other named insureds like your subcontractors) are in the process of performing work.
Imagine you’ve built a wall and the wall falls. There’s no third-party damage or injury - the wall did not fall on a neighbor’s car or hurt a passerby. The only damage is to the wall itself. This sort of damage is typically excluded from GL coverage.
This clause also typically excludes damage resulting from work that was improperly performed. If your painting subcontractor does a shoddy job on an interior paint job, dripping paint all over carpeting and hardwood floors in the process, the cost to repaint walls and ceilings and repair/ replace flooring typically isn’t covered by your GL policy.
A general liability policy is not a warranty against your work. So it’s not surprising that damage resulting from defective workmanship, incorrect installation, or faulty materials is generally excluded.
If you incorrectly install a cabinet that comes loose and damages the wall it was attached to, the ‘your work’ exclusion generally means the cost of repairing the wall and reinstalling the cabinet is yours to pay.
Another reason that faulty workmanship is often excluded from a general liability policy is the occurrence conundrum.
Faulty workmanship is typically not considered an “occurrence”.
Generally speaking, it’s an occurrence that triggers coverage from a general liability policy.
In all of these examples, something happened to cause third-party property damage or injury.
In most cases, failing to meet the standards of your job is not considered an occurrence, and will not trigger coverage from your GL policy.
Is there any way to protect yourself against the cost of faulty workmanship?
Although your contractor general liability won’t cover you for faulty workmanship claims, you are not without options.
A faulty workmanship endorsement is available that can provide up to $10,000 coverage against faulty workmanship claims.
A faulty workmanship endorsement can protect you against claims for faulty workmanship, materials, and products that would normally be excluded by your policy. This endorsement can cover claims that would normally be excluded by damage to property, damage to your product, and damage to your work exclusions.
Not every carrier offers this endorsement, so talk to your insurance professional to find out if you can add this to your existing GL policy.
If you want peace of mind that your work is covered, ask about a general liability policy with an added faulty workmanship endorsement. Then you won’t have to worry about a small mistake resulting in a large expense down the road.
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