As a contractor, you may be wondering if errors and omissions insurance is really necessary for your line of work.
E&O insurance plans are specifically designed to help contractors stay protected where it matters most and ensure that small disputes do not turn into financially draining legal battles.
What is Errors and Omissions Insurance?
E&O Insurance is a critical piece of insurance for many business professionals such as plumbers, electricians, HVAC contractors, painters, carpenters, and others.
It serves mainly as a form of professional liability insurance that can cover you in the case of a disagreement over your work that could stem from human error, miscommunication, or the many other disputes that could arise for any reason.
Any lawsuit brought against you that claims you made a mistake in your professional services is potentially covered under most E&O insurance plans. It can help cover court costs, settlement costs, damages, and more.
In other words, E&O insurance is essential for contractors to have.
Why Do Contractors Need Errors and Omissions Insurance?
Contractors face a variety of potential risks and liabilities for the work they perform as artisans. Customers’ expectations are greater than ever and some can be quick to allege negligence in a contractor’s work.
Even the simplest of complaints can escalate if they are not handled properly or if you are not properly insured. Contractors who work hard for a long list of clients are especially prone to liability as they are forced to work more and more jobs alongside a razor-thin margin.
Most contractors have general liability insurance to cover themselves in the event of certain disputes, but E&O insurance ensures professional liability protection regarding your work.
What Does Errors and Omissions Insurance Cover?
Contractor’s E&O insurance covers damages to your work that occurs once the job is completed and that is a direct result of your personal negligence, error, or omission.
If you are held liable in a case such as this, this type of insurance covers the cost to redo or repair work as well as any of the associated legal fees you were tied to.
It is important to distinguish between this type of insurance and the more common personal liability insurance that only covers advising or design work.
This type of professional liability insurance was never historically available to smaller, personally-run businesses due to the high costs associated with them.
Recently, though, there has been an increased demand for insurance coverage for smaller, personal-run businesses due to the number of complaints and claims turning into lawsuits.
To answer this demand, more and more insurance firms have begun offering unique E&O plans to contractors with personalized deductibles and limits.
What E&O Insurance Doesn’t Cover
There is no standard offering for contractor’s Errors and Omissions Insurance. Some insurers will offer a wide range of coverage while others will offer much more rigid coverage at higher rates.
Nowadays, one of the most common routes to go down is designing the insurance plan around that contractor’s service offerings and the most common liabilities that they face professionally.
The main things that this type of insurance covers are meant to fill the gap between the general liability policy and the E&O details. This means that most E&O plans will not overlap with general liability policies, which typically cover things such as:
- Property damage
- Injury
- Intentional acts
- Works in progress
- Work completed by subcontractors
These are more typical liability coverages that are covered by general liability that every business should have.
E&O insurance, at its core, ensures that contractors are covered a step deeper and are not liable for the costs of the occasional complaint or error that arises from their work.
Contractors’ E&O policies fill the coverage gap for contractors, plumbers, electricians, HVAC contractors, and other working professionals who need to be protected from errors or accidental negligence that may arise.
If you are a contractor – don’t leave yourself vulnerable. It is important to make sure you have some form of E&O insurance tailored to your needs.
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JMG Insurance is a full-service insurance agency that specializes in making insurance easy for clients. The agency was built on the principles of providing superior customer service and quality insurance solutions for our clients, and they work hard to uphold these values today.
