Trends in the insurance and legal industry are creating new exposures for contractors. Contractors are now being held liable for damages and loss arising out of professional advice. A contractor not adequately protected, can expose their company to financial loss. Yet, less than half of all contractors in need of the coverage are buying it. Why is that? It might be that contractors don’t fully understand what the coverage is designed to do.
It is important to understand, that contractors have a professional liability exposure when they perform or subcontract design, modify plans, change a manufacturer’s specifications, or provide professional construction management services to a project owner. This exposure is increased risk for design-build projects. Most, if not all, Contractors General Liability Insurance policies includes a professional liability exclusion that removes coverage for claims arising from their professional services work.
Georgia CPLI is designed to provide the contractor with coverage for defense costs and third-party losses resulting from professional negligence. Defense cost coverage alone is important, even if allegations against the contractor are false, as the financial burden of litigation can significantly impact the contractors’ financial stability. Sometimes the biggest exposure that can lead to a professional liability situation is a simple conversation or discussion between the contractor and owner. These policies do have exclusions. Some of the common exclusions are: contractual, site safety, insured vs. insured, cost to repair faulty workmanship, and others. Coverage is readily available and we recommend all contractors consider Georgia Contractors Professional Liability Insurance as part of their business planning.
Take time to review your exposures. If you are involved in any of the following you are at risk for an uninsured loss: providing constructability reviews, selection of architects, engineers and other subcontractors, supervision of work, pre-construction services, construction manager activities, subcontracting design work or partnering in a joint effort with architects and/or engineers, employing the services of design professionals, and accepting responsibility for the project’s design via contract. Call us today…we can help.