Title: The Coverage Most Contractors Overlook — Until It’s Too Late
You can do everything right — and still get sued.
That’s the risk when you skip Professional Liability as a contractor.
Most contractors assume their General Liability (GL) policy is enough. It covers bodily injury and property damage, right? That should take care of it all.
Wrong.
If you approve specs that fail, or offer recommendations that go sideways, GL won’t cover it. Even if you didn’t swing a hammer. That’s when Professional Liability Insurance steps in.
Let’s break it down.
What Is Contractor Professional Liability Insurance?
Professional Liability Insurance (also called Errors & Omissions or E&O) protects you when someone claims you made a mistake in your professional services.
This includes:
Design errors or omissions
Inaccurate specs or calculations
Project management oversights
Failure to detect issues in third-party work
Claims from construction advice, planning, or supervision
GL only covers physical damage or injury. PL covers how you think and what you sign off on.
If your knowledge or professional decisions contribute to a loss, Professional Liability is the policy that responds.
Real-World Example
We worked with a general contractor who oversaw a multifamily build. The HVAC subcontractor installed a system based on plans the GC had approved.
Two years later, mold developed because of poor ventilation design. The building owner sued.
The GL carrier denied the claim — because the issue stemmed from a design-related approval, not a physical act of construction.
Thankfully, the contractor had a Professional Liability policy. It covered the defense and eventual settlement.
Why General Liability Isn’t Enough
GL is essential. It protects against damage caused during operations. But if you offer input on materials, layouts, designs, or project coordination, you’re exposed in other ways.
Consider these gaps:
Professional judgment: If your call on structural layout contributes to failure, GL won’t pay.
Design-build exposure: You handle both the specs and the build — you need both GL and PL.
Sub oversight: Approving a sub’s work can make you liable for it.
Contractors often blur the lines between construction and consultation. If a claim arises from your role as a professional, not just a builder, you need coverage that fits.
Who Should Carry Professional Liability?
Design-Build Firms: You’re responsible for both design and execution. PL is non-negotiable.
GCs with oversight responsibility: If you coordinate trades and sign off on plans, you're at risk.
Specialty Contractors: HVAC, electrical, and plumbing subs often provide layout recommendations.
Project Managers: Anyone directing work or approving third-party input has exposure.
Even if you don't create blueprints, you might still be liable if you stamp approval on them.
FAQs
Q: Is Professional Liability required by law?
A: Not usually, but more developers and lenders are requiring it in contracts — especially on large or complex jobs.
Q: What’s the difference between GL and PL?
A: GL covers physical harm caused by your work. PL covers financial harm caused by your professional judgment.
Q: How much does it cost?
A: It varies, but for small-to-midsize contractors, PL can start around $1,500/year. Premiums depend on project type, contract value, and prior claims.
Q: Can it be bundled with my other coverage?
A: Sometimes. It’s often written as a standalone policy, but some carriers may include it in a package for design-build firms.
Final Word
Professional Liability fills the coverage gap most contractors don’t know they have.
If your name is on the plan, the risk is yours — even if your hands never touched a tool.
Don’t let one approval or missed issue cost you everything.
Want a second look at your current coverage? Let’s review it together.
