January 7, 2019
Sean Mulhern

Understanding Contractors E&O Coverage

As a business owner, it is very important to understand how having contractors’ E&O (Errors and Omissions) insurance can bolster your overall coverage.

As a business owner, it is very important to understand how having contractors’ E&O (Errors and Omissions) insurance can bolster your overall coverage.

I recommend contractors’ E&O coverage to all my contractors, and it is often something I see left off when I do policy comparisons for them.

It can be a crucial area of coverage for a lot of different businesses, and here are some examples why:

An example in action

Your company is hired to replumb a small commercial building. Faulty work done either by you or one of your employees leads to a rupture and water damage.

Your general liability is only going to take care of fixing the damage related to that faulty work. What your general liability won’t do is take care of the materials and labor costs for you and your team to go in and fix that problem. This is where contractors’ E&O would come in.

Other things that contractors’ E&O can cover:

  1. The labor fee paid to a contractor by a client who is now suing after faulty electric work ended up causing damage
  2. Clients suing a broker or an investor after an investment does not go well
  3. Several businesses suing a server hosting company after a data breach leads to hackers gaining access to client data

The bottom line

Contractors’ E&O can save you tens of thousands of dollars in labor and material costs that your general liability coverage does not insure. Businesses that are independently hired to do jobs see their contractors’ E&O coverage pay dividends all the time.

These days, customers focus heavily on getting the best bang for their buck. With contractors’ E&O coverage, companies can worry less about the competitive marketplace pushing them to cater unreasonable perfection to their customers while still trying to make a profit. All companies want to do their best, but no matter how careful we are, mistakes can happen. Even the smallest of complaints can quickly become nightmarish legal disputes.

Many contractors are not aware that these conflicts aren’t covered by general liability policies.

A lot of businesses’ general liability policies exclude:

  • Your work
  • Your product
  • Impaired property

You are left exposed by these exclusions in any commercial general liability policy when mistakes are made on the job.

Don’t let this be you — have a chat with me to see if we can work something out.

Fortunately, E&O coverage can be included in your policy to fill the gaps within your existing general liability coverage. Also, it’s more affordable than a separate insurance policy.

It’s designed specifically for contractors like you.

I’m looking forward to talking with you more about contractors’ E&O.

What else would you like to know? If you have questions you’d like me to write about, send me an email at sean@thebusinessprotectionteam.com and I’ll write about it.

- Sean

Sean Mulhern
Commercial Insurance Broker