Construction is a high-risk industry. Every day, construction companies and their employees are exposed to hazards that can lead to injuries or property damage. Construction projects rarely, if ever, go exactly as planned and can result in significant financial losses. A well-designed risk management program that includes proper insurance coverage is a way to mitigate that risk. Two coverages often overlooked by construction companies are Professional Liability and Pollution Liability coverage.
Construction companies who already purchase these coverages need to understand that these coverages are not standardized like General Liability policies, so coverage between insurance companies can vary greatly. This is one reason why it’s important to partner with an insurance agent or broker who specializes in construction and understands the coverage they’re providing.
Contractors Professional liability insurance, traditionally thought to cover your own design errors, has evolved to cover risks associated with subcontracted design and can cover costs to make repairs before a claim is actually brought against a contractor. Additionally, some policies will cover claims resulting from mismanagement of the project. Some policies specifically cover construction management errors and omissions and therefore could cover costs related to project delays.
Contractors Pollution Liability coverage is also an important part of a company’s risk management program. Contractors can incur significant costs if they’re required to cleanup pollutants from a jobsite and environmental laws can push liability to the contractor even when there is minimal evidence they were in the wrong. These policies typically cover bodily injury, property damage, and cleanup costs associated with traditional pollutants, but also can cover exposure related to asbestos, mold, silica, lead, and others.
Unfortunately, simply having a pollution and/or professional liability is not enough. No two policies are the same and some policies provide significantly less coverage than others. If you already purchase the coverage, it’s important to evaluate your coverage on an annual basis. Some points to consider for contractors to ask if already purchase these coverages:
1. Is the definition of what’s covered under “Professional or Contracting Services” broad enough to include all your operations?
2. Will the professional liability policy respond to cover costs to repair design errors when they’re discovered or only after a claim is brought against you?
3. How broad is the definition of “pollutants” and are there any limitations to coverage for mold, asbestos, or other named pollutants?
4. What “fine print” is in the policy conditions and what are the reporting provisions?
5. Are the exclusions standard or are any of them unreasonably broad?
6. If pollution and professional coverage is purchased separately, should they be combined into a shared policy?
Both coverages have evolved significantly over the last decade. There are new entrants in this space and the competition has allowed for broader coverage and better pricing. Many construction companies let contract requirements from owners and general contractors drive their insurance purchasing decisions, but that can be a costly decision. Price is always a factor but should never be the only factor when deciding to buy the coverage. When a claim occurs, it’s better to have proper coverage than a cheap policy.
Ensuring the right insurance coverage is crucial for construction companies to mitigate risks effectively. To optimize your policy and guarantee comprehensive protection, it’s essential to consult with a knowledgeable insurance agent who specializes in construction. At McConkey, our team of construction experts is here to help evaluate your current policy, address any coverage gaps, and provide tailored solutions to safeguard your business. Don’t hesitate to reach out to a member of our team today for a thorough review of your insurance needs. Your peace of mind and long-term success are our top priorities.