Professional Liability, also known as Errors & Omissions (E&O) insurance, can cover these costs, including situations where faulty workmanship causes only financial losses without any physical damage.

For most construction claims, which often involve bodily injury or property damage, having both General Liability and Professional Liability policies is crucial. A contractor must first report claims under their General Liability policy, followed by their Professional Liability policy. Not maintaining active General Liability insurance can result in the voiding of all coverage under the Professional Liability policy or the denial of claims.

Understanding General Contractors and Artisan Subcontractors

General Contractors
A general contractor oversees the day-to-day operations of a construction site, managing vendors and trades without performing any construction directly. Instead, they hire subcontractors to handle the actual work and do not offer any design services.

Artisan Subcontractors
Artisan subcontractors specialize in one or a few trades, such as plumbing, electrical work, or carpentry. They may work under a general contractor on larger projects or manage their own contracts. Like general contractors, artisan subcontractors do not provide design services.

The Importance of Professional Liability Insurance

Professional Liability insurance is crucial for protecting contractors and artisan subcontractors against claims and lawsuits that can arise from their professional services. This type of insurance helps safeguard contracting businesses from claims of negligence, faulty workmanship, and other issues that can arise from the provision of professional services. Many contracts require Professional Liability insurance, which often covers defense costs, regulatory and administrative hearings, and more.

Key Coverage Highlights

1. Negligence and Wrongful Acts
   Coverage includes claims of negligence or failure to provide the expected duty of care in professional services.

2. Defense Costs
   Professional Liability insurance covers defense costs, including appointing an attorney, even if the claim is groundless.

3. Bodily Injury, Property Damage, and Personal Injury Claims
   It covers claims arising directly from professional services provided by contractors.

4. Regulatory Proceedings
   This insurance covers regulatory proceedings under FHA, OSHA, or ADA, up to $5,000.

5. Administrative Hearings
   Administrative hearings are covered up to $5,000, providing additional legal support for contractors.

6. Faulty Workmanship
   Coverage for claims alleging inadequate skill, quality, craftsmanship, or the use of defective materials is available, with limits up to $50,000. This does not extend to general contractors.

7. Jobsite Pollution Liability
   Professional Liability insurance also covers claims arising from the discharge of pollutants during work at a job site, with limits up to $100,000.

8. Incidental Design Exposures
   While general contractors and artisan subcontractors typically don’t provide design services, incidental design exposures can still be covered under Professional Liability insurance.

Policy Details and Requirements

Professional Liability insurance policies for contractors typically include:

• Coverage Limits: Up to $2 million.
• Deductibles: Starting from $1,000.
• Premiums: Starting at $270 per year.
• Revenue Limits: Applies to businesses with annual revenues of up to $10 million.
• General Liability Requirement: An active General Liability policy is mandatory.
• Policy Flexibility: Can be purchased as a standalone policy or packaged with another policy from providers like Hiscox.
• Admitted Policy: These policies are typically admitted, meaning they are backed by the state’s insurance guarantee fund.

Types of Businesses That Benefit from Professional Liability Insurance

Professional Liability insurance is particularly beneficial for various classes of business, including but not limited to:

• Appliance Installation
• Glass and Glazing
• Masonry
• Cabling and Electrical
• HVAC and Plumbing
• Painting and Carpentry
• Interior Renovations
• Flooring and Irrigation
• Roofing
• Framing
• Lighting
• Solar Installations

Professional Liability insurance is a valuable addition to the coverage portfolio of general contractors and artisan subcontractors. It provides crucial protection against claims that are not covered by General Liability insurance, safeguarding the financial health and reputation of contracting businesses. To ensure comprehensive protection, consider investing in a Professional Liability policy tailored to your business needs.

If you’re a contractor or subcontractor, don’t leave your business exposed. Contact us today to learn more about Professional Liability coverage and how it can protect your operations from unforeseen claims and legal challenges. Or complete an application  online and get our insurance quotes for your business: https://www.paperless-insurance.com/get-a-quote-now/