Completed Works Liability: What It Means for Trades and Service Businesses

Completed Works Liability: What It Means for Trades and Service Businesses

You finish a job, collect payment, and walk away. The client is happy—or so you believe. But three months later, you receive a letter: a retaining wall you installed has collapsed, a deck has developed structural cracks, or a commercial cleaning solution has etched a marble floor. The work is done. The contract is complete. Yet suddenly, you are facing a claim for tens of thousands of dollars in rectification costs, property damage, or even personal injury.

This is the reality of completed works liability, and it is one of the most misunderstood exposures in Australian public liability insurance. Many trades and service business owners assume that once a job is finished, their risk ends. Legally, it does not. Under the common law of negligence and the Civil Liability Acts of each state and territory, you can be held liable for defects, failures, or injuries arising from work performed years earlier—provided the loss occurred within the limitation period (typically six years from the date of damage, not the date of completion).

Your public liability policy may respond, but only if it includes cover for “completed operations” or “products and completed operations.” Without that extension, you could be left uninsured for the very claims that threaten your business most. This article explains what completed works liability is, how it differs from other coverages, what your policy likely says, and what you can do to protect your business.

What Is Completed Works Liability?

Completed works liability refers to your legal responsibility for property damage or personal injury caused by work you have finished and handed over to a client. It is distinct from liability arising during the performance of the work—for example, dropping a tool on a client’s foot while on site.

The key legal principle is that your duty of care does not end when you walk off the job. If your completed work is defective, fails, or causes harm, you may still be in breach of that duty. This is well established in Australian tort law. For instance, in a New South Wales Supreme Court case involving a defective roof installation, the court held the builder liable for water damage that occurred two years after completion because the installation did not meet the required standard of care.

State Civil Liability Acts (e.g., Civil Liability Act 2002 (NSW), Wrongs Act 1958 (Vic), Civil Liability Act 2003 (Qld)) generally govern these claims. They set out the standard of care, the test for breach, and the availability of proportionate liability for concurrent wrongdoers. Importantly, these Acts do not extinguish your liability after completion—they merely define the rules of the game.

For trades and service businesses, the exposure is real. According to 2026 data from the Australian Financial Complaints Authority (AFCA), completed works claims represent approximately 22% of all public liability disputes lodged by small businesses. The average claim value in this category is $48,000, with some exceeding $250,000.

How Completed Works Liability Differs from “During Works” Cover

Most standard public liability policies are designed to cover incidents that occur while you are actively working: a spark from welding ignites a client’s shed, a painter spills solvent on a carpet, or a scaffolder drops a plank onto a car. These are “during works” claims.

Completed works liability is different. It arises after you have left the site and the work is in the client’s possession. The policy trigger is not the moment of the defect’s creation but the moment the damage manifests. This creates a unique timing issue:

• During works: Incident occurs while you are on site. Loss is immediate and observable.
• Completed works: Incident occurs weeks, months, or years later. The defect may have existed from the moment of completion but only caused damage later.

Your policy’s wording must explicitly cover “products and completed operations” or “completed operations” for these claims to be insured. Many standard public liability policies exclude completed works unless specifically endorsed. If you rely on a generic “public liability” policy without checking this, you may have a gap.

For example, a plumber who installs a hot water system that leaks six months later, causing water damage to the client’s floor, would likely need completed works cover. If the policy only covers “during works” incidents, the claim could be denied. This is a common source of disputes at AFCA, with the authority regularly upholding insurer decisions where the policy wording clearly excludes completed operations.

Who Is Most at Risk? Common Scenarios by Trade

Completed works liability is not uniform across all trades. Some businesses face higher exposure based on the nature of their work and the potential for latent defects.

High-Risk Trades

• Builders and carpenters: Structural defects, waterproofing failures, roof leaks. A deck built with improper fixings may collapse years later.
• Electricians: Faulty wiring can cause fires or electrocution after completion. Even if the work passes inspection, a latent defect may emerge.
• Plumbers: Leaking pipes, failed hot water systems, or inadequate drainage can cause extensive property damage over time.
• Landscapers: Retaining walls, paving, and drainage systems can fail, leading to subsidence or flood damage.
• Commercial cleaners: Using the wrong chemical on a surface can cause etching, discolouration, or structural weakening that only becomes apparent after repeated cleaning cycles.

Moderate-Risk Trades

• Painters: Peeling or flaking paint may not cause immediate harm but can lead to claims for rectification if the work is defective.
• Tilers: Loose tiles can cause trips or falls months after installation.
• HVAC technicians: Improperly installed air conditioning units may leak water or fail, causing damage to ceilings or walls.

Low-Risk Trades (but still exposed)

• Office-based service providers: Even if you do not physically alter a structure, your advice or design work can cause economic loss or property damage. For example, a graphic designer who provides a faulty installation file that damages a client’s printing equipment may face a completed works claim.

In 2026, AFCA data shows that construction trades account for 58% of completed works disputes, followed by electrical and plumbing trades at 22%, and cleaning services at 12%.

What Your Public Liability Policy Should Say (and What It Often Doesn’t)

To be covered for completed works, you need a policy that explicitly includes cover for “products and completed operations” or “completed operations.” This is not always standard. Many off-the-shelf policies, particularly those sold through comparison platforms like BizCover, offer this as an optional extension rather than a default.

When reviewing your policy, look for these key terms:

• “Products and completed operations” – This is the standard term used in Australian insurance. It covers liability arising from goods you supply or work you have completed.
• “Completed operations hazard” – A narrower term that only covers liability after the work is finished, not for products you sell.
• “Defective workmanship” exclusion – Some policies exclude liability for the cost of rectifying your own defective work. This is separate from completed works cover. Even with completed works cover, you may not be insured for the cost of fixing your own mistake—only for the damage that mistake causes to third parties.

For example, if you install a faulty electrical switch that causes a fire, your completed works cover should pay for the fire damage to the client’s home. But the cost of replacing the switch itself may be excluded under a defective workmanship clause.

Typical Policy Wording (Simplified)

A good policy will say something like:

“We will indemnify you for your legal liability to pay compensation for personal injury or property damage arising out of your products or completed operations.”

A poor policy may say:

“This policy covers liability for personal injury or property damage caused by an occurrence that takes place during the period of insurance.”

The second wording does not cover completed works because the occurrence happens after the work is done.

State-by-State Considerations

The Insurance Contracts Act 1984 (Cth) governs all general insurance policies in Australia. It requires insurers to act with the utmost good faith and to clearly disclose exclusions. However, it does not mandate that completed works cover be included. That is a matter of product design.

In some states, such as Queensland and New South Wales, home building legislation imposes mandatory insurance requirements for certain residential building work. For example, the Queensland Building and Construction Commission Act 1991 requires builders to hold a specific policy for structural defects. This is separate from public liability and covers the cost of rectification, not third-party damage. If you are a builder, you must comply with both regimes.

Exclusions and Gaps You Need to Know

Even with completed works cover, several common exclusions can leave you exposed:

• Defective workmanship exclusion: As noted, the cost of fixing your own defective work is often excluded. You are only covered for the damage that defect causes to others.
• Latent defects exclusion: Some policies exclude damage that arises from a defect that was not discoverable by reasonable inspection. This is rare but can appear in older policies.
• Faulty materials exclusion: If you supply a product that is inherently defective (e.g., a batch of faulty cement), the policy may exclude liability for damage caused by that product.
• Contractual liability exclusion: If you agree to a contract that imposes a higher standard of care than common law, the policy may not cover that additional liability.
• Professional indemnity exclusion: If your work involves design or advice, completed works liability may cross over into professional indemnity territory. Public liability policies typically exclude professional negligence claims.

How to Identify Gaps

Read your policy schedule and wording carefully. Look for the “Definitions” section to see if “completed operations” is defined. Check the “Exclusions” section for any mention of “defective workmanship,” “products,” or “completed operations.” If in doubt, ask your broker or insurer directly: “Does my policy cover liability for damage caused by work I have finished and handed over to the client?”

If you are using a comparison platform like BizCover, note that the policies displayed may vary in coverage. You should not assume that the cheapest option includes completed works cover. Always request a copy of the full policy wording before purchasing.

How to Manage Completed Works Risk (Beyond Insurance)

Insurance is a safety net, not a substitute for risk management. To reduce the likelihood of a completed works claim, implement these practices:

Document Everything

• Take dated photographs of completed work at handover.
• Obtain signed completion certificates or handover documents.
• Keep records of materials used, including batch numbers and supplier invoices.

Use Written Contracts

• Include a clause limiting your liability for latent defects to a reasonable period (e.g., 12 months). Note that such clauses may be unenforceable under state legislation for residential building work.
• Specify that your work complies with relevant Australian Standards and building codes.

Conduct Post-Completion Inspections

• For high-risk work, offer a free inspection six or twelve months after completion. This allows you to identify and rectify minor issues before they become major claims.

Maintain Professional Indemnity Cover Where Needed

• If your work involves design, engineering, or advice, you likely need professional indemnity insurance in addition to public liability. The two covers are complementary, not interchangeable.

Stay Current with Standards

• Australian Standards are updated periodically. Using outdated methods or materials can increase your risk of a defect claim. For example, the 2025 update to AS/NZS 3000 (Wiring Rules) introduced new requirements for electrical installations that may affect completed works claims.

FAQ: Completed Works Liability for Trades and Service Businesses

Q: Does my public liability policy automatically cover completed works?

No, it does not. Many standard policies only cover incidents that occur while you are working. You need a policy that includes “products and completed operations” cover. Check your policy wording or ask your insurer directly.

Q: What is the difference between completed works and defective workmanship cover?

Completed works cover pays for damage your finished work causes to third parties (e.g., a leaking pipe damages a client’s floor). Defective workmanship cover pays for the cost of fixing your own mistake (e.g., replacing the faulty pipe). Most policies exclude defective workmanship.

Q: How long can a client make a claim after I finish the job?

Under the Civil Liability Acts, the limitation period for property damage claims is generally six years from the date the damage occurs. For personal injury, it is three years. The claim can be made years after you completed the work if the damage only became apparent later.

Q: Does completed works cover apply to products I supply?

Yes, if your policy includes “products and completed operations.” This covers liability for goods you sell or supply, such as a faulty appliance you install. However, if you manufacture the product, you may need separate product liability insurance.

Q: Can I rely on a certificate of currency from my insurer as proof of cover?

No. A certificate of currency only confirms that a policy exists at a point in time. It does not describe the scope of cover. You must read the full policy wording to confirm completed works cover is included.

Q: What happens if I change insurers mid-year? Does completed works cover apply to past jobs?

It depends on the policy wording. Most public liability policies are “claims made” or “occurrence based.” Under a claims-made policy, you need cover at the time the claim is made. Under an occurrence policy, you need cover at the time the damage occurred. If you switch insurers, you may have a gap for past work. Always check before changing.

Q: Are there state-specific requirements for completed works cover in residential building?

Yes. In Queensland, New South Wales, and Victoria, residential builders must hold statutory insurance for structural defects (e.g., QBCC insurance in Qld, Home Building Compensation Fund in NSW). This is separate from public liability and covers the cost of rectifying major defects. Public liability completed works cover is an additional protection for third-party damage.

Q: What should I do if I receive a completed works claim?

Do not admit liability. Notify your insurer immediately, even if you believe the claim is unjustified. Delayed notification can void your cover under the Insurance Contracts Act 1984. Cooperate with your insurer’s investigation and provide all documentation. If the claim is denied, you can lodge a dispute with AFCA.