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 critical it is to have comprehensive general liability insurance. This insurance will protect your company if any damages or injuries occur due to your work.

Not fun stuff to think about, we know.

Still, it’s important.

Your insurance coverage could save your business, or, better yet, you could lose it if you’re not properly covered and are served with an expensive lawsuit.

That’s why it’s essential to ensure 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 restricts their coverage of past works.

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

For example, a remodeling company, Pretty Good Remodelers, remodeled a deck in 2010 while Acme Insurance covered them. Acme’s policy expired in 2011, and Pretty Good Remodelers bought a new policy through XYZ Insurance. Later, in 2011, the deck failed and caused damage to the home.

Due to the prior work 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 for covering the damage. Therefore, Pretty Good Remodelers may be 100% liable for all damages.

In some cases, an insurance company automatically includes prior work exclusions, especially if the client had gaps in insurance coverage in the past. However, the prior work exclusion can often be removed, especially if the broker requests it.

We remove the prior works exclusion whenever possible. If you want to know if your general liability insurance policy includes a prior works exclusion, we’d be happy to review it and let you know. Contact us by completing this form.