Completed Operations under CGL - "Even After" or "Only After"

Recently, I happened to read about a case involving the interpretation of the term 'completed operation' under a CGL policy, which caused a little confusion.

The background to this particular case is a newly constructed building handed over by the builder to the principal. However, before the completion of the defect liability period (maintenance period), the building experienced a crack, which resulted in the tenants being compelled to vacate the premises. Consequently, the tenants initiated legal proceedings against the principal, leading to the involvement of the builder's Commercial General Liability (CGL) insurance policy.

According to the analysis I read, the interpretation of "completed operation" is as follows:

The Full Court concluded that the completed building was not a “Product” but a “Completed Operation”. Therefore, pursuant to the terms of the Policy, the Court determined that the Insured Party was only entitled to an indemnity for "Completed Operations" for damage that occurred after the defects liability period. Therefore, it was not entitled to cover for this claim.

But I doubt that the concept of "completed operation risk" does not work in the manner suggested by this interpretation.

1. Standard public liability insurance typically covers liabilities that arise from the insured premises only, excluding any liabilities that occur beyond the premises' limits.
2. Work-away public liability insurance extends coverage beyond specified premises to specific territories. For example, if the insured undertakes work at a client's location, liabilities arising during the course of the work would be covered. However, once the insured leaves the client's premises, any subsequent damages resulting from their work would not be covered by this policy.
3. On the other hand, the 'Completed Operation' cover under a CGL policy addresses the gap that is not covered by the work-away policy. It provides coverage for damages occurring to third parties even after the completion of work and the insured's departure from the client's premises, as long as it falls within the policy's scope.

Therefore, the completion of the underlying work alone does not impact the eligibility of the claim. If the cause of loss is not eligible for a claim during the work, it is unlikely to be eligible after the work is completed.?

It is important to highlight that the "Completed Operation" extension under CGL policies covers liability that arises "even after" a work project is finished, not "only after" it is finished.

In my opinion, the eligibility of the claim in the discussed case should not be determined solely based on the completion of work, as it was interpreted. (It is important to note that without access to the complete policy wording and coverage details, it is difficult to ascertain how "completed operation risk" is interpreted in such a way in this specific scenario.)?

Furthermore, terms and conditions under a CGL policy are typically provided together with products and completed operations unless specified otherwise. The policy commonly includes a standard exclusion for claims directly or indirectly arising from a product recall, warranty and guarantee, and product inefficacy.

Applying this exclusion to the situation described, the crack in the building could be categorized as "product inefficacy" while the defects liability period may be considered a "warranty" issue.

Considering these factors, under standard conditions, the incident in question may indeed fall within the coverage of "Professional Indemnity" insurance rather than being covered under a Commercial General Liability (CGL) policy.?