meeting deadlines. Between managing your crew and meeting client expectations, there’s a lot on a contractor’s plate. But what about when an unforeseen professional liability issue pops up? It’s no secret that construction is risky business, and even the most experienced pros can have an “oops” moment that they wish they could just undo. Can you imagine the headache of a client claiming your work was substandard or caused them monetary damage? Professional liability insurance, also known as errors and omissions coverage, is the solution you need when Murphy’s Law hits your business.
Professional liability insurance for contractors is a safety net for claims that the work you completed was somehow negligent, inaccurate, or incomplete. Professional liability insurance is your business’s best friend when it comes to financial ruin in the form of lawsuits and legal hassles. These days, with projects more complex and expectations higher than ever, it’s become an absolute must-have coverage that can protect all the hard work and investment you’ve put into your contracting business.
The Need for Coverage on Your Job Site
Risk is part of the construction industry’s DNA. When you work with high-stakes projects, deadlines, and clients who demand perfection on every detail, there are plenty of opportunities for misunderstandings and oversights. One miscommunication about a project’s specifications or a misstep in design recommendations can result in an expensive lawsuit against your business. With professional liability insurance, however, one such lawsuit couldn’t possibly bankrupt you after years of hard work and accumulated savings.
Professional liability insurance exists for good reason, which is to protect contractors from the unique exposures of the job. Whether you’re offering consulting services, building design, or large-scale renovations, there’s room for claims to arise. A client might come back and accuse you of making recommendations that led to project delays. They could claim the building codes you used resulted in expensive modifications. These situations are more common than you might think, and you can’t afford to face the legal fees that could result.
The great thing about professional liability insurance is that it’s an all-in-one solution to risk management. It covers all the associated legal costs, including settlements and judgments that could result from a client or third-party claim. You can rest easy knowing your business has insurance to cover any gaps. If you don’t have millions, this assurance could be vital to recovering from a legal claim.
Coverage Details for Building and Construction Contractors
Contractors may encounter a number of specific exposure areas that professional liability insurance typically covers. On top of the list are negligence claims, which can occur when a client feels you didn’t meet the expected professional standards in the provision of your services. Should they make such an allegation and it results in a judgment or settlement, your policy will kick in to defend you and cover the payment.
Errors and omissions in design work are another important aspect of contractors that the right policy covers. Many construction professionals are also involved in the design process of projects or must work to exact specifications provided by architects. When mistakes are made during this process, or in other ways lead to client dissatisfaction and project complications, your insurance policy is there to handle the legal and financial fallout. Complex projects particularly require the integrity of the design to ensure a successful outcome.
This protection also covers contractors who outsource certain jobs to subcontractors. If your subcontractors make mistakes or errors that impact the building project, they’ll be looking to you to take responsibility as the business leader on the job site. The client will often blame you for their loss, even if it would be nice if this weren’t the case. Professional liability policies protect you and your business from the financial impact of your subcontractors’ mistakes, which is essential for jobs involving many different teams.
Win More Contracts with Client Confidence
Professional liability insurance doesn’t just protect your bank account; it can boost your business in other ways, especially in the area of your client relationships. Professional liability insurance is something many clients see as the new normal when vetting contractors. It’s good to know you can offer this coverage and stand behind your work, which is part of your marketing.
Your credibility as a risk manager makes you more attractive to commercial and institutional clients, which opens doors to larger projects that can pay better. Many of these clients will not consider contractors who can’t provide proof of professional liability insurance. By working with insurance brokers like Bowthorpe & Associates Insurance Producers, you can obtain the coverage you need to stay competitive in a crowded market and demonstrate to prospective clients that you are a professional business that values accountability.
Professional liability insurance can bring peace of mind to you and your clients. If you’re able to cover everything adequately through your insurance program, you can rest easy at night knowing that you can handle whatever comes your way. And because clients also feel the peace of mind in knowing there’s coverage to back you up if something goes wrong, this could translate to better business relationships, referrals, and repeat work for you. You deserve that kind of protection as a contractor because there are too many uncontrollable things that can go wrong in this industry.
Be Smart About Your Policy Limits
As a contractor, it’s wise to assess the types of projects you usually undertake and the associated risks. If you do complex, high-risk renovations or commercial work, for example, you’ll need broader coverage than a local handyman who performs residential repairs and maintenance. Look through your history with client complaints and see if you can identify where you’ve been most vulnerable to claims.
Insurance professionals are skilled in helping contractors identify gaps in their coverage, which you might not see on your own. For many years, they’ve worked with contractors and have learned the ins and outs of this industry. You can also rely on their help to show you policy features you might not even know exist that are specific to contractors. Partner with a trusted agency that can find you the best rates and help you understand the coverage you’re paying for.
Cheaper isn’t always better, and when it comes to comparing policies, that’s often the trap that people fall into. The policy with the lowest premium might seem like a fantastic deal at first glance, but if it leaves you vulnerable in an area that’s important to your business, the trade-off will cost you much more down the road. You have to be smart and balance affordability with comprehensive protection that you can afford when the time comes.
FREQUENTLY ASKED QUESTIONS
What does professional liability insurance for contractors cover?
Professional liability insurance coverage includes any claims of negligence, inaccuracy, or incompleteness on your part in the provision of your services as a contractor. This could be in the form of design errors, failure to deliver as promised, and other situations involving lawsuits, legal fees, settlements, and judgments.
Do I need professional liability insurance if I already have general liability coverage?
Yes and no, as these are different coverages. General liability for contractors is all about bodily injury and property damage, while professional liability is specific to your trade and the performance of your professional services.
How much does professional liability insurance cost for contractors?
Your experience, project type, claims history, business size, and coverage limits affect the cost. Most experienced contractors pay less in premiums than those just starting out in the business.
Will professional liability insurance for contractors cover subcontractors’ errors?
Professional liability insurance policies generally cover claims that arise from the errors of a subcontractor if it affects your business. This can be a critical component of your coverage in case your subcontractors have no or little coverage of their own. That said, policy language differs, so be sure to review your coverage carefully to see what’s included.
How do I file a claim under my professional liability insurance policy?
To file a claim under your professional liability insurance policy, you should first gather all pertinent documentation of the incident in question, including contracts, correspondence, and any other evidence. Please contact your insurance provider at your earliest convenience to report the situation and initiate the claim process. Prompt reporting and full documentation will go far in ensuring claims go as smoothly as possible.