What does contractors’ E&O insurance cover for construction contractors?
Construction errors and omissions insurance helps protect contractors from potential business disputes. If a client claims you failed to deliver the promised services or that your work was subpar, your E&O construction insurance will help cover the costs to defend your business or fix the problem.
Errors and omissions insurance for independent contractors in construction can help cover a variety of costs, such as:
- Professional negligence (actual or alleged)
- Legal defense costs
- Legal judgments
Learn more about what errors and omissions insurance covers.
Why do construction professionals need contractors’ Errors and Omissions insurance?
Property owners and developers pour a lot of money into construction projects. When the results don’t meet their expectations, they’re likely to hold the construction contractor responsible. No matter if their claims are accurate or not, a client may ask you to pay for any losses if they believe that you made a mistake in your work or failed to deliver the agreed-upon services.
It’s important for construction contractors to be prepared for the possibility of the financial costs of defending yourself or fixing any mistakes. Rather than paying hundreds or thousands of dollars out of pocket, having construction insurance coverage can help you pay for any expenses related to client disputes.
In some states, you may be required to carry contractors’ E&O insurance in order to obtain construction licenses or permits. In addition, most clients will require you to have this insurance coverage, especially for high-value construction projects.
What are some common risks faced by construction contractors?
Here are some of the common risks construction contractors could be exposed to at work:
Business mistakes
If you make a mistake in your work that causes someone to lose money, you’ll need to cover the costs to make things right.
For example, you might accidentally damage the flooring in a client’s home while installing new cabinets or putting up drywall. Contractors’ errors and omissions insurance would help cover the costs of repairs or replacements.
Accusations of professional negligence
Construction clients rely on the expertise and professionalism of their contractor. If they feel you’ve neglected your responsibilities on the job, they may sue you for financial damages.
If a client claims that you used defective materials in your work, for example, they might file a lawsuit against you. Your E&O insurance can help with legal costs so you can defend yourself.
How much does contractor Errors and Omissions insurance for construction professionals cost?
NEXT offers contractors’ errors and omissions insurance coverage that is customized to the needs of each construction professional.
This type of professional liability insurance costs $26 to $45 per month for 40% of NEXT customers. In the construction industry, independent contractor E&O insurance costs largely depend on the type of work that you do. For example, the median monthly premium for a carpenter is just $21, but for a handyman, it’s $60.**
A number of factors affect how much you’ll pay each month for this insurance, including:
- The state where you work
- How many employees you have
- Your claims history
- How high you set your limit
- Your work experience
NEXT offers tailored business insurance for construction professionals
NEXT offers convenient and affordable contractor errors and omissions insurance for pros in the construction industry. It only takes a few minutes to get the insurance coverage you need online.
Simply use your mobile device or computer to complete a contractors’ E&O insurance application, compare your insurance options, purchase coverage and get a certificate of insurance.
Get an instant quote online today.
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