If the Products and Completed Operations Exclusion appears on your General Liability policy, you would not have coverage for any bodily injury or property damage arising after the job is completed and accepted by the owner or purchaser. Examples of such lawsuits that would not be covered include:
- A fire caused by faulty wiring occurs three years after construction resulting in a total loss to the house, its contents, and the death of three occupants.
- Water damage caused by failure to install adequate flashing causes rotting to wall supports and wood sheathing.
- Five years after construction, the roof begins to sag due to truss failure.
In other words, you would only have coverage for premises-related incidents during the course of construction. Examples of such lawsuits that would still be covered include:
- A child wanders onto the job site and is injured while playing.
- A worker accidentally severs an underground utility line.
- A worker accidentally starts a fire during construction that burns down a neighbor’s house.
Synthetic Stucco (EIFS) Exclusion
Most General Liability policies no longer provide coverage for lawsuits arising from synthetic stucco (EIFS) related problems. Each insurance company seems to have a different version of the exclusion. Furthermore, each state has its own case law that has a bearing on the impact of the exclusion.
As a general rule, Homebuilders/Remodelers should no longer use EIFS on their new construction projects if they expect to have coverage arising out of and EIFS related problem. The more complicated issue arises out of what coverage (if any) exists for EIFS projects that were performed in the past. You might be surprised to find out that you may not have coverage for future lawsuits arising out of your past EIFS jobs. You need to know the facts so that you can protect yourself from bankruptcy!
The answers to these questions are complicated and 99% of insurance agents don’t give the proper advice because they are not dedicated experts. It pays to be working with a competent insurance agent who can advise you on this topic.