Tom's Blog
There is a direct correlation between an improving economy and the demand for contracting work, which sounds great in theory, but there are some pitfalls for the contractors who are trying to accept the influx of jobs and complete them to satisfaction. If you are an artisan contractor, you need to be aware of a common gap in contractors’ insurance that could leave you in a hole.
Filling the Gaps
The high demand for contracting work means that contractors may be rushing to complete jobs, which can result in costly errors. According to the Bureau of Labor Statistics, there is currently a shortage in skilled contractors, which means the current contractors are faced with an excessive amount of work that can’t be filled with other skilled laborers.
Rushing to completion can be financially devastating when careless mistakes are made. Without the right type of contractors’ insurance, you could risk your business reputation, lose your assets, and be faced with legalities that could result in financial disaster.
Typically, contractors are required to have a Commercial General Liability (CGL) insurance policy which is designed to protect you against claims made by third parties for bodily injury, personal injury, advertising injury, and property damage; however the standard N.C. CGL policy comes with certain provisions, conditions, and exclusions that if you aren’t aware, could lead to a financial nightmare. The exclusions in a typical N.C. Commercial General Liability insurance policy are:
- Your Work
- Your Product
- Impaired Property
As a contracting business owner, these exclusions are considered part of your cost of doing business, but it’s these same exclusions that can also leave you exposed when mistakes are made on the job. However, the good news is that this coverage gap can be “filled” by investing in a Contractors Errors and Omissions (E&O) policy. Mistakes, while on the job, can lead to customer disputes, legal action, and financial ruin unless you have the right type of insurance protection.
Characteristics of E&O (Errors and Omissions) Insurance Protection
- An inexpensive endorsement that provides peace of mind knowing you will have the right protection when mistakes are made.
- This endorsement provides coverage for claims made by a third party who is claiming property damage caused by a contractor’s “wrongful act” in rendering or failing to render “contracting services ” as outlined in the said policy. This coverage provides much needed protection for mistakes made during the actual construction work.
- This add-on endorsement provides protection for awarded damages and legal fees that are incurred, subject to the policy limits.
- This E&O Insurance typically excludes work performed by subcontractors.
- This endorsement provides coverage at a much cheaper rate than a separate N.C. business insurance policy.
As a contractor, you realize that with each job, you run the risk of costly mistakes, angry customers, potential lawsuits, and poor exposure for your business and reputation. Your hard earned business and reputation are worth every ounce of prevention. If you have any questions regarding E&O insurance protection, give us a call at 866-869-3335 and we can assist you with all of your N.C. contractor business needs.
