Contractor’s Errors & Omissions Insurance: Everything You Need To Know

Contractor’s Errors & Omissions insurance, also known as contractor’s professional liability insurance, is an important yet often forgotten insurance coverage by many contractors.

Almost every contractor carries some form of general liability coverage. While these policies can provide much-needed protection for bodily injury and property damage claims that occur as the result of a contractor’s work, they typically don’t account for all forms of negligence. 

That’s where contractor’s errors and omissions (E&O) insurance comes into play.

Here’s a brief overview of a contractor’s E&O insurance and why it is a critical component of a contractor’s overall risk management program…

 

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Contractor’s Errors & Omissions Insurance

Here’s why contractor’s errors & omissions insurance is so important to your business: Design flaws.

This could mean improperly setting up an HVAC system. Putting an electrical system into a home that is incapable of handling the voltage load. Putting a wall in the wrong place. Not laying down enough foundation and the foundation cracks under the weight of the building.

Simply put, general liability policies aren’t adequate to protect against errors and omissions claims, necessitating standalone coverage. Most general liability policies exclude your work, products, and impaired property, creating significant insurance gaps.

Making contractor’s E&O insurance even more crucial, general contractors are particularly vulnerable to claims of negligence following unintentional damage to an insured party, impairment of property, damage to products, or similar incidents that can occur without warning during a construction project. Even simple complaints have the potential to escalate into costly legal disputes. 

Moreover, courts often rule against contractors in claims related to errors and omissions, and without the proper protection, general contractors would have to cover the damages out of pocket.

E&O policies can help contractors close gaps in their insurance coverages, providing coverage for claims related to the following:

  • Failing to deliver promised services
  • Negligence in providing professional services
  • Poor, incorrect, or incomplete work
  • Errors and oversights

Why Purchase Contractor’s E&O Insurance?

Strong E&O insurance policies can protect you and your business following a claim, helping you cover expenses related to court costs, lawyer fees, and settlements.

NOTE: It should be noted that E&O insurance may not extend to your subcontractors, and you should encourage them to secure their own policies.

A contractor’s professional liability insurance is an absolute must for every contractor who is creating designs because you could have a major loss that is not due to the quality of your work. You did perfect quality work, but because of a design decision, there was a failure in the project, and that is not covered under general liability.

You have to have contractor’s errors and omissions insurance.

The Rub

Insurance for contractors and contracting businesses is what we do here at Rogue Risk.

Rogue Risk is a one-stop shop to help you get the tile contracting insurance you need to protect your business from accidents, injuries, legal fees, and damaged vehicles.

Our insurance packages typically include: 

This is exactly what we do at Rogue Risk.

We’re artisan contracting insurance specialists.

If this is the relationship you want with your insurance provider, we would love to talk to you.

I look forward to introducing you to a new way of viewing your insurance program.

Thank you,

Ryan Hanley

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