Do Contractors Need Professional Liability Insurance

General contractors need various insurances, including builder’s risk, tools and equipment, and commercial general liability.

Due to blurred responsibilities between contractors and design firms, contractors face new risks.

Many use design-build, increasing professional liability exposure.

Lacking professional liability coverage can lead to costly errors or lawsuits.

Professional Liability Insurance for contractors
Professional liability insurance for contractors: Photo source (Sapling)

Errors and omissions insurance safeguards against mistakes, protecting contractors and professionals you hire from job-related losses like delays, budget overruns, and injuries or property damage caused by negligence.

Why Contractor’s Professional Liability Insurance Matters

Contractors, whether in plumbing, electrical, building, or general work, must uphold high standards.

Failing to do so can lead to liability for negligence.

Unlike general liability insurance for accidents, professional liability covers claims of negligence or subpar work causing financial loss for customers.

It’s vital for design-build, general, or artisan contractors who offer professional services for a fee.

Legal defense costs can rise rapidly in lawsuits, even if you’re ultimately not held liable.

Five Tips for Avoiding Professional Liability Disputes

Here are five ways contractors can be proactive and prevent a professional liability claim:

Have a written contract

Avoid verbal agreements; insist on written contracts with timelines, service scope, and complaint resolution procedures.

Communicate frequently

Regular email communication with customers maintains a documented record, aids in meeting deadlines, and prevents minor issues from escalating.

Have planned milestones

Include short-term goals in your plan to stay on track for timely project completion. Share them with customers for prompt corrections if needed.

Adhere to industry best practices

In addition to following the laws and regulations you are required to in your province, stick with adhering to industry best practices to ensure you meet the expected standard of care.

Review your insurance policy

Certainly, carefully examine your professional liability insurance policy, its limits, and exclusions before starting any project.

Make sure you have sufficient coverage for all project risks. If unsure, consult a licensed broker for guidance.

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