We live in a very litigious society – lawsuits are not only common but they are now becoming a part of business day to day life.  Most contractors understand the need for standard liability insurance – the majority of jobs require a certification stating that ample coverage is in place.

But,  are you aware that your standard liability coverage will NOT protect you from potential liability exposures resulting from errors in your work, or negligent acts of your subcontractors or an independent contractor hired to perform work on your behalf?   The insurance that WILL protect you is called Errors & Omissions coverage or E&O.

Here’s why Contractors – both big and small should strongly consider including Contractor’s E&O in their insurance portfolio

• Customer’s expectations are greater than ever – they are quick to point the finger at a contractor’s work. Even a simple complaint could result in a lawsuit. The cost to defend adds up quickly.
• The current market is very competitive – contractors are being forced to do more for less – often with very strict timelines.  Mistakes are more likely to happen when your team is under a tight deadline.

Here are some great examples of E&O exposures for Contractors:

• Carpet Installer –A new employee picks up the wrong carpet at the warehouse, delivers it to the jobsite and the installation crew spends 3 days installing the carpet before the owner of the business realizes it wasn’t the one that was chosen. The Carpet has to be removed, a cost in itself. What if the business has to shut down an additional day or two to accommodate you replacing the carpeting?  Losses can add up quickly
• HVAC – a dealer is installing a couple new AC units on top of a manufacturing building.  The worker failed to install the correct supports and the AC unit falls through the roof damaging not only the roof, the unity but also the equipment below AND injuring several of the client’s workers.
• Landscapers –  The wrong chemical was applied to a condo complex lawn – not only does the turf die, but the chemical possibly got into the nearby brook.  The cost to replace the sod and the potential pollution clean-up hit 6 figures.  The cost of the correct chemical $75.99.
• Carpenter – Sub contractor doesn’t follow the blueprints and incorrectly places support beams.  The structure is deemed unsafe by the inspector and has to be taken down and re-done, delaying the project and costing the Carpenter thousands.

Don’t risk not being covered.  Mistakes happen and legal fees can shut down your business quickly if the right Risk Management plan is not in place.

For more information on Contractors E&O coverage – give me a call, I’d be happy to review your current program.

Jon Belek

jbelek@srfm.com