While most contractors understand the need for General Liability insurance, many don’t realize the need for Errors & Omissions (E&O) insurance in the event of unintentional errors or omissions, which could end up being very costly.
Contractors are prone to E&O claims due to a variety of situations where damage may occur, or property they are contracted to do work on becomes impaired in some unforeseen way. Courts have generally ruled in favor of the plaintiff in these types of cases making an E&O policy a valuable tool of defense.
Only E&O coverage will provide protection in the event that such a situation arises, and having it will keep the contractor from being personally financially responsible when a mishap occurs. A contractor generally has a large crew of working personnel performing a number of tasks to complete a project. This means that there is the propensity for a number of things that could possibly go wrong.
Policies designed for contractors have special clauses and inclusions that are not generally found in other E&O policies. By carefully reviewing the document’s provisions one can make an informed decision as to whether the insurance will provide the necessary coverage. It is also a good idea to carefully read the fine print of the policy. E&O insurance for contractors often has stipulations that limit the coverage capacity named in the policy. And it is important to understand that subcontractors are not covered under most E&O policies, so invest wisely when hiring subcontractors to assist on projects.
Additionally, some policies can be set up to handle claims that are made while the policy is in force, actions completed before the policy began, or claims that become known during a specified period after the policy is discontinued. E&O insurance can even be designed for professionals who want coverage for claims that arise after they have retired.