Restoration Insurance Tip: The “Your Work” Exclusion
The “Your Work” Exclusion on the standard general liability policy is a hotly debated and often misunderstood exclusion on the general liability policy. We want to take a few paragraphs to briefly explain what this exclusion is and why it’s important your restoration company understands it. Also, we must preface this post by saying that every insurance policy is different so it’s very important that you work with your agent and attorney to understand how your specific policy will respond in the event of a claim. This is only intended to provide a brief overview of the exclusion and nothing else.
The easiest way to understand the “Your Work” exclusion on a general liability policy is to remember that your insurance policy is not intended to be a warranty. A general liability policy is designed to pay for property damage and bodily injury that you cause to others. It does not pay to repair or replace fault work preformed by you or your company.
Here’s a basic example to explain this premises: Your company installs a roof on a building. The roof begins to leak causing damage to the drywall, floors, and ceilings. Your general liability policy will pay to replace the damaged property (drywall, floors, and ceilings), but it will not pay to replace the roof your company originally put on as that is considered “your work”.
If you are a general contractor working with a lot of subs, this can present a huge issue. Some insurance policies will define “your work” as any work that was preformed by your subcontractors on your behalf. When the coverage includes that definition, the insurance policy will basically exclude any insurance claim associated directly with the building you worked on.
Some insurance policies will require that you obtain certificates of insurance from all of your subcontractors with an additional insured endorsement and strong indemnity in your subcontractor agreements before they will offer coverage for the work performed by your subcontractors.
The most important thing to remember is that your policy is designed to cover the work you perform. To see exactly how your insurance policy will respond, though, we highly recommend talking with your agent and attorney to ensure your protected.