Contractors Insurance: “Your Work” Exclusion

While it’s essential to know what your insurance policy covers, it is just as important to understand what your policy does NOT cover. In commercial insurance terms, an “endorsement” refers to a document attached to an insurance contract that adds, removes or alters the scope of coverage under the policy. To avoid confusion following an incident, it is smart to be aware of any new or existing endorsements that impact your commercial insurance policy.

Though countless endorsements exist, today’s focus is on CG 2294. A general liability policy covers damage resulting from your work but does not cover damage to “your work.” CG 2294 intends to exclude coverage for “damage to work performed by subcontractors on your behalf.” This exclusion is the response to a rising number of claims from general contractors based on the work of subcontractors.

So, how does this impact contractors? In short, it diminishes a general contractor’s coverage.

If you are a general contractor that subcontracts most of your actual “work,” you may be impacted by the exclusion CG 2294. Essentially, if your policy includes this endorsement, you DO NOT have any coverage for work performed by subcontractors on your behalf.

To be protected for faulty work performed by your subcontractor, contractors should seek coverage that does not include this endorsement. If your coverage includes the endorsement, general contractors must weigh the benefit of premium savings against the risks related to construction defects.

Ultimately, before getting yourself into a jam, take time to understand the extent of your insurance coverage. At J.R. Prewitt & Associates, we are committed to understanding our customers’ needs and delivering customized services to obtain the highest level of client satisfaction. Contact us today to learn more about how exclusions like these could impact your coverage.