Contractor’s professional liability insurance is a facet of the construction industry that continues to blossom. This growth is good news in many ways. It provides the opportunity for more thorough coverages, more competition, and an ability to obtain better overall coverage than ever before.  However, the growth of contractor's liability insurance also highlights some common pitfalls that its owners can be subject to if they are not careful.  The Insurance Services Office (ISO) regulates Contractor's liability insurance for the entire industry. Even so, each policy can be different.  Each insurance carrier has different standards, provisions, and exclusions that can take a loss that is entirely covered by one policy and make it into one that is not covered at all under another policy.


Misunderstood Coverage

One of the most important areas things to watch out for is a gap in coverage. Assuming that one coverage covers all of your insurance risks is a dangerous mistake to make.  The purpose of contractor’s professional liability coverage is to protect the contractor against any design flaws caused by them or a third party. It is a critical coverage by all means, but does not always provide for every type of unexpected incident that might occur on the job site.

A coverage that can be essential in bridging that coverage gap is pollution coverage.  The purpose of pollution coverage is to protect against damages incurred from pollutants in the course of construction. Damages can include injury to a person, damage to property, and even cleanup.  Sometimes pollution coverage is included in a contractor's professional liability policy, but other times it is not and has to be purchased as a separate policy. Knowing whether or not the policy contains coverage for pollution introduces us to another area in which to be cautious. 


Policy Language

There is nothing more essential in the process of making sure that you have the coverage you need than knowing the specifics of the coverage you have. An understanding of what each coverage includes for as well as ensuring that you comprehend fully how each coverage works in the event of a claim is imperative to making sure the policy properly covers your needs.  Policy language can include lots of jargon and unclear terms so getting clarification on anything that you do not understand from your agent is a good way to stay informed.

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Along with ambiguous language, word definitions can be another trip-up. Some insurance terms can have different definitions from carrier to carrier. Placing a different meaning behind the same insurance term can lead to you having entirely different coverage than you expected in the event of a claim. A perfect example of this can be related to auto insurance where many people use the term "full coverage" loosely. Some use the term to mean physical damage coverage, and to others, it implies that policy includes every single coverage available. Pay attention to any words that may have a vague meaning.   


Exclusions

Exclusions to the policy can be a big game-changer regarding whether or not you are covered Know the specifics of any policy exclusion on your contractor's professional liability insurance policy. In doing so, you can be more aware of possible coverage pitfalls. Not only can exclusions render your coverage useless in certain situations, but violations of some exclusion can also cause you to commit insurance fraud.

The best step that you can take toward ensuring that your policy is covering everything that you want it to, is to make sure that you are taking the time to understand what your policy covers and what it does not. If you have more questions about Contractor’s professional liability insurance consultant your insurance agent today. 

For more information contact: Skyline Risk Management, Inc. at (718) 267-6600