SPECIALTY LINES / PROFESSIONAL LIABILITY
Why is this important and what does it cover?
Regardless of your industry, most general liability policies will not provide indemnity or defense for claims arising from: design work, professional consultation, engineering, architecture, damage to your product, damage to your work, impaired property, errors or omissions, etc. The intent of either a Professional Liability or Errors & Omissions policy is to provide additional coverage not found in the General Liability.
Specialized coverage developed in the 1990s for contractors, not considered traditional professionals (e.g., architects, engineers). It covered claims arising from errors and omissions in performing design-build projects or on-the-job design consultation.
A mechanical contractor completed a $450,000 custom ductwork job at a multi-family residential complex. A few months after, several residents complained that their units were not cooling properly. The property owner hired their own inspector who found the ductwork design was flawed in several areas which led to airflow restriction. Additionally, some of the mechanical systems did not have the adequate cooling capacities. The mechanical contractor had to reinstall sections of the ductwork and replace several of the mechanical systems which was not covered by their insurance policy. This type of exposure (including material and labor costs) can be insured on a custom tailored Contractors' Errors & Omissions policy.
Broad definition of Prof. Services
Cost to Recall Product
Cost to Redo Work
Defense Outside Limits
Coverage for Product Defect
Faulty Workmanship, Design & Installation
Contingent Bodily Injury, Property Damage & Consequential Loss
Flexible Coverage Limits