Professional Liability Insurance
What Professional Liability Insurance Covers for Contractors
What Professional Liability Insurance Covers for Contractors — what contractors need to know to protect against professional liability claims.
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The Claims Professional Liability Is Designed to Handle
Professional liability insurance (also called Errors & Omissions or E&O) protects contractors when a client claims your professional advice, design input, or project management decisions caused them financial harm. It covers legal defense costs and settlements — gaps that general liability leaves wide open.
Errors in Professional Advice
If a contractor recommends a specific approach, material, or system and it fails — resulting in financial loss to the client — professional liability covers the resulting claim. This includes advice given verbally on a job site as well as formal written recommendations.
Design Errors (Design-Build Contractors)
Design-build contractors who create plans, drawings, or specifications as part of their services face professional liability exposure for design errors. If a design flaw leads to structural issues, cost overruns, or project failure, the design-build contractor can be held professionally liable.
Omissions — What You Forgot to Include
An omission is a failure to include something that should have been addressed in your professional services. Missing a critical specification, failing to identify a site condition, or omitting a required code requirement can all generate professional liability claims.
Project Management Failures
Construction managers and GCs who manage project schedules, budgets, and subcontractor coordination face PL exposure for management failures. Significant schedule overruns, budget mismanagement, or coordination failures that cause financial harm are professional liability claims.
What Professional Liability Does NOT Cover
Physical property damage and bodily injury are covered by GL, not PL. Intentional wrongdoing is excluded. Criminal acts, fraud, and pollution claims typically have separate exclusions. Professional liability is strictly for financial harm arising from professional service errors.