As a contractor, you design, build and repair homes and other structures. Purchase contractors professional liability insurance coverage to protect your assets.
What is Contractors Professional Liability?
In the 1990s, contractors professional liability coverage was introduced primarily for contractors who design and build projects. This insurance covers financial obligations associated with fixing an error or omission made by you or the subcontractors you hire.
What Does Contractors Professional Liability Cover?
Contractors professional liability insurance covers a variety of work-related circumstances, including:
- Negligence by you or one of your hired subcontractors
- Design errors caused by your or one of designers you hire
- Faulty workmanship by you or one of your hired subcontractors
- Cost overruns or delays caused by bad sequencing or lack of coordination
Additional coverage provided by contractors professional liability may include these options. Check your specific policy for details.
- Pollution coverage for claims involving pollution from job-site activities, including failure to detect pollutants
- Indemnity coverage if you must file a first-party claim against the project’s architect or engineer who is liable for the loss
What’s the Difference Between General and Professional Liability?
To ensure you purchase the right coverage for your business, understand the difference between general liability and professional liability.
General liability will cover bodily injury and property damage that occurs because of ordinary construction means and methods, including contract breaches. It’s definitely essential, but professional liability is important, too. It covers costs associated with damage that result from your failure to render professional services.
As an example, let’s say the handicap ramp you construct for a local business fails. You can only file a claim through your general liability policy if someone is injured or the property is damaged. Otherwise, you’ll need a professional liability policy to cover the cost of replacing the ramp.
How to Purchase Contractors Professional Liability
Purchase a contractors professional liability policy through your commercial insurance agent. You will want to purchase an annual policy based on your operational needs. Additionally, you may purchase a policy for specific projects especially if they’re extensive.
In most cases, you’ll want a true professional liability policy. You can add professional liability coverage as an endorsement or umbrella policy on your general liability policy, but it typically offers limited coverage that’s inadequate for your needs.
It’s important that as a contractor you understand your responsibilities for completing projects properly, on time and on budget. There are always risks in your industry, so purchase contractors professional liability insurance. It can pay for mistakes and protect your assets as you perform your job.