George, the contractor, has more than 20 years of experience in his craft although navigating the insurance part of his business can sometimes still be foggy. No business is able to run without some bumps and after a few unpleasant customer experiences, George decides to contact his trusty insurance agent to see what actions can be taken to improve his coverage, especially liability to help with the bumps. Fortunately, his agent advises George about adding Contractor’s Errors and Omissions.
A great deal of artisan contractors deems that their trade and craft is not simply learned overnight, but takes many years to become a master. Typically, after contractors realize their product is not covered under most Commercial General Liability (CGL) policies, they are not too pleased. A majority of the policies most artisan contractors purchase is a license providing protection when they are proven to be legally liable for bodily injury or property damage to a third party. Many CGL policies exclude damage to the product once it had been completed.
When a contractor calls and tells their insurance agent the unfortunate news that a client is suing them due to being unsatisfied with the final outcome of the project, or it is wrong all too many times, the agent will have to notify the contractor that the claim will be turned in, but there is to be no coverage for this situation. However, if the artisan would have obtained the Errors and Omissions insurance (E&O), there would have been coverage to help ease the situation.
What does contractors E&O cover?
*Protects the contractor against claims of faulty workmanship and materials.
*Protects the contractor for damage to their work after a portion of the project has been completed.
*Protects them when acting in the capacity of a contractor from costs, losses or expenses incurred due to your work product being recalled.
While the contractor’s E&O is not required to be licensed, it can greatly help protect a contractor’s reputation in defending a claim relating to their work/art that is considered to be a learned craft. For example, you would never go to a doctor who did not carry Medical Malpractice Insurance so why would you continue to operate without Contractors E&O? For more information on E&O insurance contact your insurance agent.