Here’s one of the most misunderstood parts of a contractor’s general liability policy: it’s built to pay for the damage your work causes, not to pay you to redo the work itself. That line runs through a group of exclusions often called the “your work” or business risk exclusions.

This page explains how those exclusions generally work on a standard commercial general liability (CGL) form, why the subcontractor exception matters so much, which endorsements take it away and what Florida’s courts have said. It’s written for owners and project managers of Florida contracting firms who sign subcontracts, hire subs and get asked about their completed operations coverage.

The short version

  • Repairing or replacing your own faulty work is generally not covered. That’s treated as a business risk you control, not an accident.
  • Damage your faulty work causes to other property can be covered, subject to the policy’s terms. Think of a leaking pipe you installed that ruins drywall, flooring and the owner’s furniture.
  • Work your subcontractors performed can make a big difference. On many standard forms, damage to your finished work is covered if a sub did the damaged work or the work that caused the damage. Some endorsements remove that.
  • The endorsements on your policy, not the policy name or the limits on the certificate, decide how much of this coverage you actually have.

What “your work” means in a CGL policy

Standard CGL forms published by ISO (Insurance Services Office) define “your work” broadly. It generally includes work or operations performed by you or on your behalf, plus the materials, parts and equipment furnished with that work. It also generally includes the warranties and statements you make about the work’s quality or performance.

Two other defined terms matter here:

  • Products-completed operations hazard. In general terms, this is injury or damage that happens away from your premises and arises out of your product or your work after the work is completed or abandoned. Work is usually treated as completed at the earliest of these times: when all the work in your contract is done, when all the work at one site is done if your contract covers more than one site or when that part of the work has been put to its intended use by someone other than another contractor or sub on the same project. Work that still needs service, correction or repair but is otherwise complete is treated as completed. The policy’s exact wording controls.
  • Property damage. Physical injury to tangible property, including loss of use of that property, and loss of use of tangible property that isn’t physically injured.

The exclusions that work together

No single exclusion does all the work. On a standard ISO CGL form, several exclusions combine to keep the policy from paying for the contractor’s own product or performance. Here’s what each one generally does, in plain words:

Exclusion (standard ISO CGL) What it generally does When it usually comes up
Damage to property, parts j(5) and j(6) Removes coverage for the particular part of real property you or your subs are working on when the damage arises from those operations, and for the particular part of property that has to be repaired because your work was performed incorrectly on it While the job is still in progress
Damage to your product (k) Removes coverage for damage to your product arising out of the product itself Manufacturers, fabricators and suppliers more often than installers
Damage to your work (l) Removes coverage for damage to your work arising out of it or any part of it and included in the products-completed operations hazard, with an exception for work performed by a subcontractor After the job is completed
Damage to impaired property (m) Removes coverage for impaired property, meaning property that can’t be used or is less useful because it includes your defective work or because you didn’t perform a contract, when it can be restored by fixing your work or performing the contract. It also removes coverage for property that hasn’t been physically injured. A narrow exception applies to loss of use of other property after sudden and accidental physical injury to your work once it’s been put to its intended use. Claims for loss of use or delay with no physical damage to other property

Two phrases do a lot of work in these exclusions: “that particular part” in the ongoing operations exclusions, and “included in the products-completed operations hazard” in the your work exclusion. Courts in different states read them differently. Coverage on an actual claim depends on the policy issued, the endorsements attached and the facts.

The subcontractor exception

The damage to your work exclusion on the standard form has an exception. It generally doesn’t apply if the damaged work, or the work out of which the damage arises, was performed on your behalf by a subcontractor. Industry references call this the subcontractor exception and describe it as the basis for much of the construction defect coverage a CGL policy provides.

Why it matters for a general contractor or a prime contractor that subs out most of its work: if your framing sub’s error leads to water getting in and damaging finished work by other trades after completion, the exception can restore coverage for that resulting damage under the standard form. The cost to fix the sub’s own defective framing may still fall outside coverage, as the Florida cases below show.

For a self-performing trade contractor, the exception does less, because less of the work is done by subs. That’s one reason the same endorsement can matter a lot to one contractor and very little to another.

Endorsements that remove or narrow it

ISO released two endorsements in late 2001 that remove the subcontractor exception:

  • CG 22 94, Exclusion: Damage to Work Performed by Subcontractors on Your Behalf. Removes the exception for all of your work.
  • CG 22 95, Exclusion: Damage to Work Performed by Subcontractors on Your Behalf, Designated Sites or Operations. Removes it only for the sites or operations listed on the endorsement, such as residential or condominium work.

Insurance companies also use their own wording. Some endorsements exclude residential or condominium projects, some limit coverage when a sub didn’t carry the insurance your subcontract required and some exclude certain types of work outright. Two quotes with the same limits can treat the same defect claim very differently, which is why the endorsement schedule deserves as much attention as the premium.

What Florida courts have said

This section is general information about published court decisions, not legal advice. How a court treats a specific claim depends on the policy language and the facts. Talk with a Florida attorney about your own situation.

  • 2007 decision. The Florida Supreme Court held that a subcontractor’s defective work can be an “occurrence” under a standard post-1986 CGL policy when the damage wasn’t expected or intended by the contractor, and that physical injury to the completed project caused by that work is “property damage.” On the policy in that case, which kept the subcontractor exception, the resulting damage was covered unless another exclusion applied.
  • 2008 decision. The court drew a line between the defect and the damage. The cost to repair or replace defective work itself is not property damage. If defective installation damages other components that weren’t defective, the damage to those components can be covered, subject to the policy.
  • 2017 decision. The court held that the Chapter 558 pre-suit notice and repair process is a “suit” under the CGL policy in that case, because the policy counted alternative dispute resolution proceedings the insured takes part in with the insurance company’s consent. So the duty to defend in that process depended on the insurance company’s consent.

The practical takeaway from the 2017 decision: when you receive a Chapter 558 notice of claim, report it to your insurance company and ask for its consent before you take part in the 558 process, so you don’t lose defense help you might otherwise have. Florida’s statute gives specific deadlines for responding to a 558 notice, so don’t sit on it. For example, the person who receives the notice generally must send the claimant a written response within 45 days, or 75 days for an association representing more than 20 parcels. Sending a copy to your insurance company doesn’t by itself count as a claim unless your policy says so, and your policy’s own notice rules still apply.

Illustrative examples

These examples are made up and simplified to show the general logic. They don’t predict how any real claim would be handled.

What happened What standard CGL coverage may respond to What it generally won’t pay for
A plumbing sub’s fitting fails a year after completion and water damages finished drywall, cabinets and flooring installed by other trades The resulting damage to the other trades’ finished work, if the subcontractor exception is intact and no other exclusion applies Replacing the defective fitting itself
Same leak, but the policy carries CG 22 94 Damage to property that isn’t part of your work, such as the owner’s furniture Damage to the completed project, since the endorsement removes the sub exception
Your own crew frames an exterior wall out of plumb and it has to be torn down and rebuilt, but nothing else is damaged yet Generally nothing, because there’s no damage to other property Tearing down and rebuilding the wall
A slab is poured out of tolerance and the owner claims lost rent during the delay, with no physical damage to anything else Generally nothing; the impaired property exclusion often applies The delay costs and the repair

A frequent dispute is the cost to tear out good work to get to the defective work, such as removing undamaged tile to fix a failed waterproofing membrane. Whether that cost is covered depends on the policy wording, the facts and the court. Don’t assume either way.

Other coverage that can fill some gaps

  • Builders risk covers the project as property while it’s being built. Many forms exclude faulty workmanship itself but cover resulting damage from a covered cause, depending on the form.
  • Contractors professional liability can respond to design errors and, depending on the policy, some construction management errors that a CGL policy may exclude. Some forms add rectification coverage for fixing a design error before it becomes a claim.
  • Performance bonds aren’t insurance for the contractor. The bond protects the project owner, and the contractor generally has to repay the surety for losses it pays.
  • Subcontractor insurance and contracts. Requiring subs to carry completed operations coverage, name you as an additional insured and keep it in force after the job is a key part of protecting against defects in their work.

Questions to ask before you renew

  • Does my policy carry CG 22 94, CG 22 95 or any other endorsement that removes or narrows the subcontractor exception?
  • Are residential, condominium or certain types of work excluded or limited?
  • Is there an endorsement that limits coverage when a sub doesn’t carry the insurance I required?
  • What is my products-completed operations aggregate limit, and is it separate from my general aggregate?
  • How do I report a Chapter 558 notice, and how does the insurance company handle consent to participate?
  • Do I do any design or design-build work that needs professional liability coverage?

Frequently asked questions

Will my general liability pay to fix a defect in my own work?

Generally no. A CGL policy is built for damage your work causes to other property and for bodily injury, not for repairing or replacing the work itself. Damage to other property caused by the defect can be covered, subject to the policy’s terms.

What is the subcontractor exception?

It’s an exception to the damage to your work exclusion on standard ISO forms. It generally restores coverage for damage to your completed work when the damaged work, or the work that caused the damage, was performed by a subcontractor.

How do I know if my policy removes the subcontractor exception?

Check the forms schedule on your policy for CG 22 94 or CG 22 95, and read any insurance company endorsements that mention subcontractors, residential work or construction defects. Ask us and we’ll review it with you.

Does a Chapter 558 notice count as a claim?

The Florida Supreme Court held in 2017 that the 558 process is a “suit” under the policy it reviewed, but the insurer’s duty to defend depended on its consent. Report the notice to your insurance company and ask for consent before taking part. This is general information, not legal advice.

Is the cost to tear out good work to reach a defect covered?

It depends on the policy wording, the facts and how a court reads them. It’s a frequent point of dispute, so don’t assume it is or isn’t covered.

Sources

General information, not legal or coverage advice. Coverage depends on the policy issued, its endorsements and the facts of each claim. Policy terms described here refer generally to standard ISO forms, and the forms on your policy may differ. Court decisions are summarized for education only. Talk with a Florida attorney about legal questions.

McGriff-Williams Insurance is an independent insurance agency in Gainesville, in business since 1983 and licensed in Florida. We’re at 3501 W University Ave, Gainesville, FL 32607. Questions: (352) 371-7977, Monday to Friday, 9 a.m. to 5 p.m.

Last updated October 31, 2026