When explaining the NY contractors insurance business risk exclusion, often I receive facial expressions of disbelief.
The business risk exclusion of a commercial general liability policy reads (this is specific language to the carrier involved in this example. However, the language is similar to most carriers):
“This insurance does not apply to ‘property damage’ to: that particular part of real property on which you or any contractor or subcontractor working directly or indirectly on your behalf is performing operations, if the “property damage’ arises out of those operations.”
===> In general terms, a NY contractors work is not covered under ny commercial general liability until the job have been completed in its entirety.
Example for NY Contractors Insurance
Let’s say you are an NY Electrical Contractor working on a fuse box and wires.
In the course of replacing the wires there is a spark and the entire house burns down. Your NY contractors insurance will cover the house and its contents (up to your limit of insurance) EXCEPT for the fuse box and wires.
The real property considered your “work” in this example is the fuse box and wires and is thus excluded by the business risk exclusion. All the collateral damage, (the rest of the house), was not your work and is covered by your commercial general liability policy.
Contractors Insurance and Completed Work
In this scenario you are the same NY Electrical Contractor working on the same fuse box and wires.
However, this time you complete your work and move on to the next job. A month later there is a spark from one of the wires you replaced and the entire house burns down. Now your Products/Completed Operations liability takes over. The business risk exclusion does NOT apply and the entire loss is covered including the fuse box and wires (up to your limit of NY contractors insurance).
Be aware of the exclusions on your NY contractors insurance policy. Just because you have an insurance policy does NOT guarantee there is coverage.
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