Los Angeles Claims Adjuster Property and Causality Practice Exam

What type of coverage does a contractor typically require?

1. Contractual liability coverage

2. Completed operations coverage

3. Property damage coverage

4. Inspection coverage

The correct answer is: Completed operations coverage

Completed operations coverage is essential for contractors because it provides protection against claims arising from work that has been completed. This type of coverage is particularly important in the construction industry, where the nature of the work often involves various risks even after the project is finished. For example, if a contractor installs a roof and later there are issues like leaks that cause damage, completed operations coverage would help protect against liability claims related to that completed work. Contractual liability coverage is also relevant but primarily addresses liabilities assumed through contracts, which may not encompass all scenarios contractors face. Property damage coverage generally refers to protection against damage to physical assets but does not specifically focus on the liability aspects after work completion. Inspection coverage tends to be more niche, aimed at protecting against liabilities arising from inspections rather than the broader activities and risks involved in construction projects. Hence, completed operations coverage is the cornerstone for contractors to safeguard themselves from potential liabilities that may emerge even after their contractual obligations have been fulfilled.