In many states, construction within the residential market is booming while activity on the commercial side is stagnant. This has led many contractors generally focused on commercial construction to venture into residential construction to supplement their income.
Be careful! Many commercial contractors have a residential exclusion endorsement attached to their commercial general liability policy. If such an endorsement is attached, the contractor has no liability coverage for any work done on residential properties.
Query your commercial construction contractors regarding any work on the residential side. Remind them of the exclusion and, if possible, have the exclusion removed if the insured is performing residential work.
Once commercial construction returns to previous levels, the insured may cease residential operations; however, they still have a completed operations exposure. Know the state's statutes of limitation and repose on residential construction and work to keep any exclusionary endorsement off the policy until those periods lapse.
COVID-19 has created many unexpected insurance issues. This may be one that has a high potential to slip through the cracks. Avoid this by notifying affected clients.
Questions on this or other agency risk management topics? Big “I" Professional Liability's risk management team is here to answer them. Visit E&O Happens, our dedicated agency risk management website, to learn more.