Most contractors take pride in the quality of their work, knowing their business reputation is on the line. But even the most conscientious contractor can make a mistake. Maybe a vendor delivers the wrong materials – the wrong color carpet or tile, for instance. If workers install it, the contractor will have to cover the costs of fixing that mistake. Worse yet, an error in electrical or plumbing work could cause fire or water damage to the job site. Who will pay for the repairs?
Without the right insurance coverage, the answer is: the contractor. That’s why contractors need a special type of insurance policy called Business Errors and Omissions.
While most contractors have a general liability policy, they often overlook this critical secondary coverage. The errors and omissions policy covers mistakes made by workers and the damages that may result, as well as labor and material costs to re-do a job done incorrectly. The “error” may be out of the contractor’s control – for instance, if a supplier ships the contractor a product that is inferior to the one they ordered. Errors in the design of the project are also covered.
An E & O policy also covers damages resulting from omissions – failure to take important steps, such as locating gas lines before beginning work, or getting the necessary permits.
The costs resulting from errors and omissions aren’t just related to re-doing the job or making repairs. If a client sues, legal fees can take the total even higher. And a general liability policy usually doesn’t cover costs resulting from errors and omissions. Without E & O coverage, one small mistake can snowball into a liability that ends a contractor’s business.
To protect contractors from these kinds of financial disasters, Patriot Insurance offers comprehensive Business Errors and Omissions coverage. Talk to a Patriot agent to learn how we can safeguard your business.
Everybody makes mistakes. But the biggest mistake of all could be not protecting your business with adequate coverage.