According to the International Risk Management Institute, Denver contractors, project owners, and project professionals have increased risk of professional liability claims. Yet, less than half of all Denver contractors in need of the coverage are buying it. Why is that? It might be that contractors don’t fully understand what the coverage is designed to do. We hope this update will help our clients in Colorado analyze their exposure and determine a course of action.
DCInsurers Mountain Brokers specializes in Denver Contractors Insurance and risk services. Insurance can play an important role in “on time and on budget” projects. If your Denver Contractors Insurance coverage is not written properly, your business may not survive financially.
Contractors have a professional liability exposure when they perform or subcontract design, modify plans, change a manufacturer’s specifications, or provide professional construction management services to a project owner. This exposure is of increased risk in design build projects. Most if not all contractors’ general liability insurance policies include a professional liability exclusion that removes coverage for claims arising from their professional services work.
CPLI is designed to provide the contractor with coverage for defense costs, third-party losses resulting from professional negligence, and pollution if coverage has been added. Defense cost coverage alone is important, even if allegations against the contractor are false, which can present the contractor with a financial burden that might significantly impact the bottom line. Sometimes the biggest exposure is a simple conversation or discussion between the contractor and owner that causes a professional liability situation.
Many of the policies have the option of adding contractor’s pollution. This can be another important coverage that every contractor should consider. Recently a contractor had a claim in which a subcontractor was refueling a truck and spilled 100 gallons of fuel into a small stream. As it turned out the subcontractor had no pollution coverage, and the general contractor was forced into litigation. The general contractor spent $20,000 just to get out of the claim.
These policies do have exclusions; some of the common ones are; contractual, site safety, insured vs. insured, cost to repair faulty workmanship, and others. Coverage is readily available and we recommend all contractors consider contractors professional liability as part of their business planning.
Take time to review your exposures. If you are involved in any of the following, you are at risk for an uninsured loss: providing constructability reviews, selection of architects and engineers and other subcontractors, supervision of work, pre-construction services, construction manager activities, subcontracting design work or partnering in a joint effort with architects and/or engineers, employing the services of design professionals, and accepting responsibility for the project’s design via contract.
We work with several major insurance companies so we can deliver the optimal rate based on your classification, credit report, and business profile. Your company’s success depends on your ability to do the job well while balancing income, expenses, and any unfortunate events like a claim or loss that can greatly cost your firm.