This day and age, contractor professional liability insurance is a must for builders, contractors, and handymen. As the conventional delivery models in construction evolve, the responsibilities of designers, engineers, and contractors have changed, blurring the lines between in terms of responsibilities. Today’s contractors are increasingly exposed to nontraditional risks, thanks to these major industry changes.
Why your Firm Needs Contractor Professional Liability Insurance
To safeguard your construction company from costly lawsuits resulting from your professional services, you should consider a contractors professional liability insurance coverage. And here is why:
You Provide Professional Services
A company or an individual that is operating as a professional contractor and is paid for their services can be held responsible for the work and advice they provide in their professional capacity. Your consultative advice on sequencing and constructability can be considered professional services, which creates liability exposures that fall outside the coverage provided in your commercial general liability coverage. You can have a professional liability exposure just by giving a bad advice that causes a problem or a loss. When you advertise services on your website as a construction manager or design-builder, it constitutes a higher level of expertise on your part, and you should live up to such expectations.
Printing of Stamping Plans
It is misleading to think that your firm doesn’t need to stamp any prints because you don’t have licensed professional engineers, designers, and architects within your internal staff. When your firm hires out the process of “stamping” design plans, there is a chance of hiring an incompetent design professional. In such a situation, you can be held vicariously liable in case of any mishaps.
Signing off on Design Work
Your firm can face legal responsibility even when it doesn’t sign off on the design for the structural work. Some of the ground changes that are often done by contractors in an ongoing project are never signed off by the project’s design professional. Hence, if some of the changes lead to a loss on the project, the liability can be added back to your firm. Again, as a contractor or design professional, you can rely on the manufacturer’s warranty on various building materials. If a loss happens when the manufacturer is probably out of business or the manufacturer’s limits have been reduced by other claims, you will be held fully responsible for the loss.
Umbrella Insurance May not Cover some Risks
Some contractors assume that a standard umbrella insurance policy will kick in and protect them when faced with legal claims that are not covered under other insurance policies. Unfortunately, your umbrella insurance policy will not cover a professional act. For instance, you could be facing a design allegation that doesn’t involve any property damage or bodily injury. In such cases, your umbrella insurance will not be triggered and you may be left without enough funds to defend your firm against the design allegations.
Protecting your Reputation
As a contractor, you can be drawn into the earliest stages of a construction project to offer vital insights and expertise. Remember, sometimes ideas and great concepts don’t always go as expected, and your client might think that your professional advice is the ultimate cause of the project failure. Contractor professional liability insurance is your weapon that can correct your wrong, indemnify the third-party, and pay your legal fees. Don’t forget that you need to protect your reputation as a professional contractor in the industry, and the entire process of defending your expertise can be very costly. As a result, the number of contractors investing in professional liability coverage has increased radically in the past few years.
You don’t have to worry about your firm’s design flaws to purchase a contractor professional liability insurance policy. If your firm’s responsibilities go beyond construction, you should consider adding this policy to your risk management strategy. To help you decide whether you need contractor professional liability insurance, discuss the details further with our experienced professional liability insurance associates. Visit our website or call us today at (805) 564-7645.