Controlled Insurance Programs: How can Completed Operations Triggers make or break a construction project’s profitability?

Many developers are seeing delays in project completion for various reasons these days, including labor shortages or supply chain issues. One issue that is perhaps a bit less mainstream is when governmental agencies are unable to perform crucial inspections or deliver Certificate of Occupancy in a timely manner.

In the dynamic realm of construction, ensuring the success of large-scale projects involves meticulous planning, skilled execution, and robust risk management strategies. Among these strategies, a fundamental aspect often overlooked is the significance of the Completed Operations Trigger within the ISO General Liability Insurance form. This trigger plays a pivotal role in safeguarding construction projects, offering long-term protection against potential liabilities long after the project's completion. Many modern CIP policies will by endorsement, change the language of this trigger. Further, a multitude of enhancements can be added to these policies to bolster coverage.  

What is the Completed Operations Trigger?

The Completed Operations Trigger refers to a clause within the ISO General Liability Insurance policy that extends coverage beyond the project's completion. It addresses liabilities arising from completed operations—those activities or services provided by a construction firm that can give rise to claims even after the project has been delivered and accepted by the client. In essence, it covers any damage or injury that occurs once the project is handed over to the owner or user.

The importance for large construction projects

Large construction projects are inherently complex and involve numerous stakeholders, intricate processes, and potential risks. The Completed Operations Trigger serves as a safeguard against unforeseen issues that may manifest long after the project's conclusion. Here's why this trigger is paramount for large construction projects:

  • Extended exposure period: Construction projects often involve a long gestation period, from planning to design, execution, and completion. The Completed Operations Trigger ensures that liabilities arising from defects, design errors, or faulty construction that manifest later are still covered, reducing potential financial burdens on project stakeholders.

  • Long-tail liabilities: Certain construction defects or errors might not become evident until years after the project's completion. The Completed Operations Trigger offers protection against these "long-tail" liabilities, providing financial support for legal defenses and settlements, if necessary.

  • Sustaining reputation: In the construction industry, reputation is paramount. Defects or issues that arise after project completion can tarnish a company's image. The Completed Operations Trigger helps maintain a construction company's reputation by providing the resources to address any unexpected claims promptly.

  • Peace of mind for clients: For project owners, knowing that the completed project is covered against unforeseen issues brings peace of mind. This can be a significant selling point for construction companies, enhancing their competitiveness in bidding for projects.

Implementing an Effective Risk Management Strategy 

To fully leverage the benefits of the Completed Operations Trigger, construction companies must adopt a comprehensive risk management strategy:

  • Thorough documentation: Maintain detailed records of project plans, design decisions, construction processes, and quality assurance measures. This documentation can prove invaluable in case of claims arising after project completion.

  • Continuous communication: Maintain open communication with clients, subcontractors, and stakeholders even after project completion. Address any concerns promptly to mitigate potential disputes.

  • Regular inspections: Periodic inspections post-completion can help identify any issues early and rectify them before they escalate into major liabilities.

  • Partnering with reliable insurers: Collaborate with a trusted insurance broker experienced in construction risk management. Tailor insurance policies to include the appropriate Completed Operations Trigger coverage to align with the nature of the project.

In the realm of large construction projects, the Completed Operations Trigger within the ISO General Liability Insurance form emerges as a vital asset for mitigating risks that could materialize long after a project's completion. By understanding its importance and integrating it into a comprehensive risk management strategy, construction companies can ensure lasting success, protect their reputation, and provide clients with the peace of mind they deserve. After all, a solid foundation extends beyond bricks and mortar—it encompasses sustainable protection against future uncertainties.  

Adam Gabler
The Author
Adam Gabler

Southwest Construction Practice Leader

With over 15 years of insurance and construction experience, Adam W. Gabler is a goal-orientated risk management advocate with an emphasis on complex casualty placements. Adam, Southwest Construction Practice Leader at Newfront, holds multiple construction professional designations and specializes in analyzing construction contracts in excess of $3B in construction values. His proactive approach to the changing needs of clients, wholesalers, and underwriters brings the most comprehensive coverage and palatable economic price point.

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