Most contractors buy general liability insurance believing it covers them if something goes wrong on a job. That is true, but only in a specific sense. General liability is designed to pay for bodily injury and property damage you cause to other people and other people’s property. It is not a warranty policy, and it is generally not designed to pay to redo your own defective work.
That distinction lives in a handful of exclusions that trip up contractors every year. The most important is usually called the “your work” exclusion. This article explains what it says, how it plays out in real claims, and what coverage options exist for the gap it leaves.
What the Exclusion Says
The standard commercial general liability form excludes coverage for property damage to “your work” arising out of it or any part of it, when that damage is included in the products-completed operations hazard. In plain English, once a job is finished, the policy typically will not pay to repair or replace your own work because it was defective.
There is an important exception in most forms: the exclusion generally does not apply if the damaged work, or the work out of which the damage arises, was performed on your behalf by a subcontractor. That exception is why general contractors care so much about it, and it is why some carriers remove it with an endorsement, which is discussed below.
The Classic Scenarios
Consider a plumber who installs a water heater with a faulty connection. Six months later it leaks. The cost to fix the connection itself is the plumber’s defective work, and the “your work” exclusion typically applies. But the leak also ruins the drywall, flooring, and cabinets below. That is damage to other property caused by the plumber’s work, and general liability policies generally respond to it.
Now consider a window installer whose units leak because they were flashed incorrectly. Redoing the flashing and resetting the windows is generally excluded. Water damage to the framing, insulation, and drywall around them is generally covered. The line is between your own work product and the resulting damage to something else.
For a general contractor who builds an entire house, the picture is harder. If the whole house is “your work,” a defect anywhere that damages the structure may fall inside the exclusion, unless the subcontractor exception applies. Courts in different states have reached different conclusions on how far the exclusion reaches, and the answer can depend on jurisdiction as much as policy language.
Related Exclusions That Work Together
The “your work” exclusion is one of a family. The “your product” exclusion applies a similar idea to products you sell. The “damage to property” exclusion removes coverage for the particular part of real property you are working on at the time of the damage, and for property that must be restored because your work was done incorrectly on it. The “impaired property” exclusion addresses situations where your defective work makes someone else’s property less useful without physically damaging it.
Together, these provisions draw a consistent boundary: the policy is meant to cover accidents that harm others, not the cost of doing the job right the first time.
The Endorsement That Changes the Math
Some carriers offer an endorsement that removes the subcontractor exception from the “your work” exclusion. Once that endorsement is attached, damage to the completed project is excluded even if a subcontractor performed the defective work. For a general contractor who relies on subs for most of the labor, this is a significant reduction in coverage, and it is often attached quietly on lower-cost policies.
If you are a GC, ask specifically whether the policy includes this endorsement. If it does, understand what you are giving up before you accept the savings.
Is There Coverage for Defective Work Itself?
General liability was never designed to pay for redoing your work, and no endorsement turns it into a warranty. There are, however, a few coverages that address related exposures.
Contractor’s professional liability, sometimes called design-build E&O, can respond when a claim arises from a design or professional error rather than a construction accident. It is increasingly relevant for contractors who do design-build, value engineering, or construction management.
Contractor’s rework or faulty workmanship coverage is offered by a small number of carriers, typically as a limited-sublimit endorsement. It is not widely available and the terms vary considerably, but it exists and can be worth asking about for certain trades.
Warranty reserves are not insurance, but many contractors set aside a small percentage of each job to fund callbacks, which is often the most realistic way to handle the cost of correcting defects.
What This Means for Your Contracts
Because general liability will not pay to fix your own defective work, your warranty obligations are a direct cost of doing business. Pay attention to the warranty period in your contracts, what triggers a warranty claim, and whether you are obligated to correct defects or only to pay damages. Requiring subcontractors to carry their own general liability and to name you as an additional insured also matters, because their policy may respond to damage caused by their work when yours would not.
Get the Policy Read Before a Claim
Every contractor should know where the boundary between covered damage and excluded work sits on their own policy, because it varies by carrier, endorsement, and state. An independent agent who specializes in contractors can walk through your general liability form, identify whether the subcontractor exception has been removed, and discuss whether contractor’s professional or rework coverage makes sense for the kind of work you do.