A project architect or engineer typically carries responsibility for the design of a house, high rise or other structure. However, contractors now also play a role in project design and may be liable if something goes wrong. Consider the benefits of purchasing professional liability insurance and the process for gaining this valuable coverage for your contractor business.
What is Professional Liability Insurance?
Contractors like you already purchase general liability insurance. It protects you if the actions of you or an employee cause bodily injury or property damage on the job. Professional liability insurance adds another layer of protection by covering negligence and design errors that may occur as you take on a variety of job site responsibilities.
Contractor's Professional Risk Exposure
In today’s construction projects, contractors may do more than build the design that’s created by an architect or engineer. For example, you may be responsible for hiring a design firm, designing certain aspects of the project or altering a current design to incorporate more functional features. In addition to design responsibilities, you may assume professional liability risks because you hire independent contractors, estimate costs for a project and schedule projects.
Why Purchase Professional Liability Insurance
The numerous tasks you perform as a contractor carry liability risks, and you face a variety of situations for which you are responsible. To cover these liabilities, you could pay the associated costs out of pocket or purchase professional liability insurance. This policy can take care of your financial responsibility, offer a layer of protection and reduce risks that jeopardize your company now and into the future.
- Design errors and omissions
- Time delays
- Budget overruns
- Required rework
- Third-party bodily injury
- Property damage
- Pollution damage
How to Purchase Professional Liability Insurance
Contractors who need professional liability insurance may purchase it in several ways. You can add an endorsement to an existing general liability or umbrella policy, purchase a stand-alone policy, or select a separate project policy depending on the work you do and contract requirements.
- Add an endorsement to an existing general liability or umbrella policy.
- Purchase a stand-alone policy.
- Select a separate project policy.
To decide which option is right for your company, consider the types of projects you do, your financial status and your budget. Individual project contracts may also include details about the type of liability coverage you must purchase. Talk to your insurance agent, too, to verify the availability of the coverage you need and want.
Some contractors buy a separate project policy specific to the work they do—examples include specialized coverage for certain trades such as Sidewalk Lift Contractors Professional Liability.
Based on your specific business, duties and job responsibilities, you may need to purchase professional liability insurance for a specific project or as a permanent addition to your contractor company. You can also review specialized programs for particular professional services such as R&D Firms Professional Liability Program to understand available options.
Please talk to your agent about your needs as you ensure you have the right protection for your business.
Frequently Asked Questions
Do contractors always need professional liability insurance?
Not always, but if you perform design work, provide professional advice, or take on design responsibilities, professional liability coverage can protect you against claims of errors, omissions, or negligence.
How is professional liability different from general liability?
General liability covers bodily injury and property damage from operations, while professional liability covers claims arising from professional services, design errors, or mistakes in the advice you provide.
Can I add professional liability to my existing policy?
Yes—many contractors add an endorsement to an existing general liability or umbrella policy, purchase a stand-alone professional liability policy, or buy project-specific coverage depending on contract needs.
Will professional liability cover time delays or budget overruns?
Some policies may cover certain financial losses related to professional services, but coverage varies by policy and exclusions may apply, so review terms with an agent.