Your Commercial Liability Insurance May Cover You For The Present, But What About The Past?

Prior Works Exclusion Explained 

If you own a construction company, you already know how absolutely critical it is to have comprehensive general liability insurance. This insurance will protect your company in the event that any damages or injuries occur as a result of your work.

Not fun stuff to think about, we know. Still, it’s important. Your insurance coverage could save your business, or, a better way to put it – you could lose your business if you’re not properly covered and get served with an expensive lawsuit.

That’s why it’s important to make sure that you’re covered for the work your company is doing today and the work you’ve done in the past. There ’s an exclusion that more and more insurance companies are adding to their general liability insurance policies that restrict their coverage of past works.

 A “prior works exclusion” is an endorsement sometimes attached to a contractors’ general liability policies. The exclusion eliminates coverage for injury or damage resulting from the insured’s work that was completed before a stated date.

For example, let’s say a remodeling company, Pretty Good Remodelers, remodeled a deck in 2010 while they were covered by Acme Insurance. Acme’s policy expired in 2011, and Pretty Good Remodelers bought a new policy through XYZ Insurance. Later in 2011, the deck fails and causes damage to the home it’s attached to.

Due to the prior works exclusion in the general liability insurance policy that Pretty Good Remodelers got from XYZ Insurance, their new insurance company won’t cover the damage. Further, if the policy is written on an occurrence form basis, the prior carrier (ACME Insurance) is not responsible to cover the damage, either. Therefore, Pretty Good Remodelers may find themselves 100% liable for all damages.

In some cases, prior works exclusions are automatically included by an insurance company, especially if the client had gaps in insurance coverage in the past. However, in many cases, prior works exclusion can be removed, especially if the broker requests it.

At Fusco & Orsini Insurance Services, we make certain the prior works exclusion is removed whenever possible. If you want to know if your general liability insurance policy includes a prior works exclusion, we’d be happy to review your policy for you and let you know. Contact us by phone or email.