Contractors need professional liability insurance (also known as Errors and Omissions Insurance) to protect themselves from claims related to mistakes, negligence, or incomplete work in their professional services. This type of insurance can be crucial for several reasons and may be relatively inexpensive to add to your General Liability Policy:
- Mistakes and Oversights: Even the most skilled contractor can make an error or overlook something important. If a client claims that a contractor’s mistake caused financial loss or damage, professional liability insurance can cover legal fees, court costs, and any settlements or judgments.
- Client Disputes: If a client is dissatisfied with the contractor’s work, they might file a lawsuit alleging that the contractor’s actions were negligent or did not meet the agreed-upon specifications. Professional liability insurance helps protect the contractor from such claims.
- Breach of Contract: Sometimes, contracts may not be fully clear or misinterpreted. If a contractor is accused of breaching the terms of a contract, this insurance can help cover the costs associated with defending against such allegations.
- Protecting Reputation: Legal disputes, even if they don’t result in a loss, can tarnish a contractor’s reputation. With professional liability insurance, contractors have financial support for legal defense, reducing the strain that a lawsuit can have on their business’s reputation.
- Required by Clients: Some clients or large projects (especially in fields like construction, architecture, or engineering) require contractors to carry professional liability insurance as a condition of the contract. It’s often seen as an essential risk management tool that assures clients the contractor can cover potential errors.
- Expensive Lawsuits: The legal costs associated with defending a lawsuit can be expensive, even if the contractor is not found liable. Professional liability insurance can cover those legal fees, which could cripple your business financially.
- Wide Coverage: Unlike general liability insurance, which mainly covers physical accidents or property damage, professional liability insurance focuses on the intellectual aspects of a contractor’s work (e.g., errors in planning, design, advice, or specifications).
Overall, it acts as a safety net for contractors, ensuring they don’t face financial ruin if something goes wrong with their professional services. Contact us today at https://www.insurance-financial.net/contractors-insurance/ or by calling 888-439-0479.