Insurance for Construction Companies and Contractors
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Professional liability / E&O insurance for contractors and construction companies

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Professional liability insurance

Professional liability insurance, also called errors and omissions insurance, protects small businesses against the costs of client lawsuits over unsatisfactory work.

Professional liability insurance covers claims and lawsuits over work mistakes

Contractor and construction mistakes, such as failure to follow a blueprint, can be financially devastating for your client. As a result, your business could be sued to recoup losses. Contractors' professional liability insurance, sometimes called errors and omissions (E&O) insurance, can provide the protection your business needs when facing accusations of negligence or errors.

This policy offers liability coverage related to:

  • Failure to deliver promised services
  • Negligence in providing services
  • Errors and oversights

This coverage can be added to a general liability policy, usually at a discounted rate.

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What can professional liability insurance cover for contractors and construction businesses?

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Failure to deliver promised services

Delays are common in the construction industry, but when it affects your client’s bottom line, you could face a lawsuit. If a customer sues a carpenter or other construction professional for not meeting a deadline or failing to deliver promised results, this policy can pay for your legal expenses, such as hiring a lawyer.

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Negligence in providing services

If a customer accuses your business of negligence – whether or not you’re at fault – you could face a costly lawsuit. Contractors’ E&O insurance can help with court costs, attorney’s fees, and judgments or settlements when a client questions the quality of your carpentry, plumbing, or electrical work.

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Errors and oversights

If a client claims that your work mistake caused financial damage, you could face a legal battle that leads to bankruptcy or worse. For example, an electrician could be sued for failing to repair faulty wiring that led to a costly reinstall. Professional liability insurance pays for legal expenses related to work mistakes, including judgments if the court rules against you.

How much does contractor professional liability insurance cost?

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Construction companies and contractors pay a median of $85 per month for professional liability / E&O insurance.

Insurance costs for construction companies and contractors are based on a few factors, including:

  • Construction and contracting services
  • Experience in your field
  • Location
  • Policy limits and deductibles
  • Number of employees

Other types of insurance for contractors and construction businesses to consider

While professional liability insurance shields against accusations of work errors, it does not offer complete protection. No matter your specialty, injuries and property damage are part of the trade. Other policies to consider include:

General liability insurance: This policy can cover expenses related to customer injury and property damage, along with advertising injury.

Business owner's policy: A BOP bundles general liability coverage and commercial property insurance at a discount. It protects against the most common lawsuits and property damage.

Workers’ compensation insurance: Workers’ comp covers medical costs for work-related injuries and illnesses. Most states require this coverage for businesses with employees.

Commercial auto insurance: This policy covers the cost of an accident involving your business vehicle. Almost every state requires this coverage for business-owned vehicles.

Contractor’s tools and equipment insurance: This policy helps pay for repair or replacement of a contractor’s tools and equipment if they are lost, stolen, or damaged.

Surety bonds: These bonds reimburse your clients for financial losses if your company is unable to fulfill the terms of its contract.

Builder’s risk insurance: This policy can pay for damage done to a structure still under construction. It can cover costs resulting from fire, vandalism, on-site theft, and more.

Get free quotes and compare policies with Insureon

Are you ready to safeguard your construction business with professional liability insurance? Complete Insureon’s easy online application today. Once you find the right policy, you can begin coverage in less than 24 hours.

Updated: January 5, 2023
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