Understand “Your Products” exclusion, limit frustration

The “Your Products” exclusion in public/general/broadform liability insurance can be extremely frustrating for builders (and other trades) in some claim situations. It can result in declined claims where the damage or loss suffered by the third party (eg. the homeowner, your client) is only to the work that the contractor has built. 

The original purpose of this exclusion is to avoid turning liability insurance into a “product guarantee”. If it was covered, this could mean insurance coverage ends up incentivising businesses to produce low quality work, knowing that any issues would become the insurer’s problem.  

A typical exclusion states: 

We will not insure you for any claim under this policy in connection with property damage to your products.

This exclusion does not apply to resultant property damage arising from your products. 

A typical definition of your product is: 

Any property, good, product, or other thing, including labels, instructions for use, advice and property which has been manufactured, constructed, erected, installed, repaired, serviced, treated, sold, supplied or distributed by you after it has ceased to be: 
a) in your possession; or 
b) under your control; or 
c) owned by you 

Basically, once a “product” that has been “constructed” or “installed” is no longer in your possession it becomes “your product” and won’t be insured if you become liable for damage to it. 

An example of this would be a new home. Once a builder has completed and handed over the home it becomes their product and any damage to it won’t be covered by liability insurance. 

The exclusion does not apply to “resultant property damage arising from your products”. This means if there is damage to other property (that is not considered to be your product) and which has been caused by the failure of your product this can still be covered. For example, if a plumbing connection leaked and caused damage to wall linings then the plumbing connection may be considered your product, and therefore not covered, while the damaged linings would still be. 

In another recent example a tiler completed the waterproofing and tiling of a new bathroom in 2020. In 2024 the owners noticed some grout was cracked and a couple of tiles had come loose. They lodged a claim in 2025. Because there was no damage to any property outside of the tiler’s product (the tiling and waterproofing work they did) the claim fell under the “property damage to your products” exclusion. 

What about contract works insurance? 

The Your Products exclusion applies once the work has ceased to be “in your possession or under your control”, whereas contract works insurance applies to damage that happens during the contract, that is when it is still in your possession or under your control. This means there is very limited overlap where contract works insurance might cover a claim that falls foul of the Your Products exclusion. The exceptions relate to cover during the maintenance period under contract works insurance. However, this only applies: 

1. If the damage was done during the construction period and only discovered later 

2. If the damage is caused while the contractors are returning to perform defect remediation work 

 Damage caused by defective work is not covered by contract works insurance, although resultant damage is. 

How does the defective workmanship cover in public liability insurance apply in this situation? 

This is also very complicated! Insurers cover defective work differently and one insurer even covers it in different ways depending on the policy you hold. 

1. If your defective work cover requires property damage to first trigger a claim 

In this scenario, if there was no actual damage there would be no cover, since there has to be some damage before the defective workmanship cover would respond to a claim. 

Assuming there is some damage, then the defective workmanship benefit comes into play. These extensions typically bring back cover for “your products”, since really by definition workmanship can only be performed on something that you work on, which would in many cases then be considered your product according to the policy, undermining the intent of covering defective work in the first place. Which is not to say that some insurers wouldn’t still approach it this way! 

2. If your defective work cover doesn’t require property damage to first trigger a claim 

This makes things a little bit easier, since we don’t have to worry about needing to have some actual property damage or loss to trigger a claim. However, with both types of cover, it only applies if the defects are discovered after you have completed your work and handed it over to the client. Again, in the context of a defective work claim the “damage to your products” exclusion will be removed to ensure that the cover can be properly applied. 

In a nutshell 

Insurers can apply a “damage to your products” exclusion when the damage is only to the work you have done and arises after your work has been handed over to your customer. It doesn’t usually apply to resultant damage (that’s damage to property this isn’t your product) and it should be overridden by cover provided under the defective workmanship policy extension, provided the damage is deemed to be the result of defective work. 

There are many and complex situations where a builder or contractor (or anyone in business really) could be held liable. Unfortunately, some of these aren’t covered by liability insurance, even if you really want them to be. The important point is to have the widest cover possible even though some things can never be insured.