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This year's general liability insurance renewal for our company did not go well. We had to choose between several policies all offering greatly re- duced insurance coverage options than we had in prior years at significantly greater premium expense. I am sure our experience was no different from other CBMR subscribers. In our case, these changes in coverage centered on changes to our products and completed operations coverage. While it is nothing new for insurers to seek to eliminate and reduce their exposure to losses, some of these new efforts strike at the core expectations contractors have for their insurance coverage.
A new issue that was presented in the insurance quotes we received was that several of our prospective insurers were not willing to provide coverage for products and completed operations for residential work. They were issuing endorsements specifically excluding this work under the products and completed operations coverage. I recognize that the overabundance of homeowner suits for defective work is the driving reason for insurers limiting coverage for residential work. These lawsuits make it all the more imperative for contractors to have this exact coverage. In discussing the proposed endorsements excluding work types from our completed operations coverage with our brokers and my boss, it became obvious that not only did we not adequately understand the coverage, our broker also did not have a good grasp on how the coverage actually worked. I thought it would be useful to provide a basic understanding to our readers of products and completed operations (PCO) coverage so when faced with your general liability renewals, you can have another tool to analyze the coverage options.
I spoke with Craig Stanovich, a risk management consultant (cstanovich@ austinstanovich.com), and Jeff Woodward, the editor of the International Risk Management Institute's CGL Newsletter, to discuss how the coverage works, where the potential pitfalls are, and how insurers are changing the terms of coverage.
Coverage explained. PCO provides coverage for losses incurred during the policy period and does not relate to the policy period for which the work giving rise to the claim occurred. The most common misperception of...