Traditional lines are blurring everywhere. Contractors and other professionals are often carrying new risks that their legacy insurance policies might not cover. This is especially true for general construction contractors, who now take on responsibilities that were historically reserved for architects and engineers.
As a rule, professional liability insurance is required by anyone who performs “specialized services”. Traditional qualifications such as degrees, certificates, or licenses might not be required to define you as a professional. If an individual (or their firm) presents themselves as experts, they generally bear responsibility for what they do and say in that capacity.
Professional Liability Insurance
This is also known more simply as ‘errors and omissions’ coverage. Professionals typically owe a higher level of care to their clients. Errors and Omissions liability provides protection against mistakes in the advice or information you provide to your clients for which they are reasonable in relying on. This form of coverage is very specific, and usually applies to cases of general “financial loss”.
Directors and Officers Liability
When working in a firm or partnership, each partner often bears the liabilities of the rest. It’s important that all stakeholders are clear as to the division of risk, and that each has adequate protections in place. Courts are more frequently finding owners and shareholders, even in sole proprietorships, held to a higher standard, even for losses not directly related to the operation of a company.
Predecessor Firm Coverage
Did you buy an existing business? Depending on the statute of limitations, you might still be liable for any damages caused by the previous partners or owners
Contractors Pollution Liability (CPL)
For those in the construction industry especially, this additional protection can prevent financial exposure to any unintended externalities. Consultants and contractors in the oil and gas industry especially may need protection for pollution related events.
Supplemental Liabilities
There’s an assortment of other specific damages, fines, and penalties that you may need protection against, based on your corporate structure and industry. Ask one of our brokers for more detail.
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Things You Should Know
Loss claims tend to come in one of four common forms:
- Damages. Physical or financial injury.
- Deficiency. Something not performed to sufficient standards, where the client will have to incur the expense of remedying what was lacking.
- Delays. Usually in the context of a loss of potential revenues owing to unmet schedule expectations on the part of the contractor.
- Over-runs. The contractor under-estimated the final cost of the project, or of related ongoing fees.
“Break of contract” claims tend to also come in four primary forms:
- Malfeasance. Doing something wrong on purpose.
- Misfeasance. Doing something wrong by accident.
- Nonfeasance. Not doing something altogether.
- Negligence. Showing clear apathy about the quality of work.
Most basic liability policies will cover defensive legal fees, though often in certain contexts and with some limitations. Please take time to review this with your broker.
Before beginning a project, we recommend all parties mapping out their collective coverage needs and ensuring that all reasonable risks have been accounted for, with suitable time-lines and adequate limits. This can save a tremendous amount of headache down the road.