Errors and omissions insurance, also called E&O, pays the legal defense costs, settlements and judgments that follow a claim that your professional work was wrong, incomplete or late. For contractors it is the policy that responds to faulty workmanship on the work you performed, which a general liability policy does not cover. Compare carrier quotes in about 5 minutes and get same day coverage in most cases.
Contractors’ E&O coverage should not be confused with Contractors’ Professional Liability Insurance. Contractors’ Professional Liability Insurance is for contractors involved in construction management and design-build work.
E&O insurance offers comprehensive protection to professionals who may face legal challenges related to their work. The key coverage elements include:
Contractors E&O insurance covers faulty workmanship. If your completed work is damaged because it was performed incorrectly and you are held liable, the policy pays to repair or replace the substandard work and covers the legal defense against the claim.
With just a general liability policy you are only covered for damage your work causes to a third party’s property, not for the cost of redoing your own work.
A contractors E&O insurance policy specifically excludes liability for:
These are covered by your General liability insurance. It also does not cover you if you bid or estimate a job incorrectly, offer opinions to clients on contracts or agreements, just to name a few things that are not covered.
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Many do. General contractors, property managers and commercial clients routinely ask for a certificate of insurance showing errors and omissions coverage before they award work, and some write a minimum limit into the contract. Carrying the policy protects the business from the cost of a negligence claim and keeps you eligible for the contracts that require it.
Any artisan contractor who regularly installs work in or around a client’s property should carry a contractors E&O policy. Most GL Liability policies now state that faulty workmanship and defective construction are not an occurrence under the terms of the policy. As a result you will not have any coverage under your general liability policy. Even if faulty workmanship is covered there are usually exclusions that can leave artisan contractors with coverage gaps. If this happens you may end up paying out of pocket for repairs or replacement of your work.
Premiums depend on your trade, annual revenue, the policy limit you choose and your claims history. Most contractors can compare quotes from multiple carriers in about 5 minutes and often start coverage the same day. Insert the current verified premium range here before publishing.
General liability covers physical harm your business causes to other people or their property. Errors and omissions covers the financial consequences of the professional work itself being wrong, including faulty workmanship on the work you performed. Most contractors carry both, because neither policy responds to the other’s claims.
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