Professional Liability Insurance Risk

Professional liability coverage protects you from civil claims of failure or negligence to perform ones professional duties brought against your business. Professional liability coverage has become essential for contractors as the result of new techniques and approaches to project delivery. Over the years, there has been a blurring of the once distinct lines between contractors and architects and designers. Contractors have been drawn into the design process, exposing them to liability. Further complicating matters is when responsibilities are shared among multiple project participants. Exposures should be assessed so that all parties accepting risk are insured appropriately.

Professional Liability Insurance

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Professional liability insurance has many names—Errors and Omissions (E&O), professional indemnity insurance and in the medical industry, it is referred to as malpractice insurance. For contractors, professional liability insurance covers the large gap that is becoming increasingly more apparent. Contractors are often times exposed to project delay or cost overruns claims but general liability plans only offer coverage for third party injury, product liability and property damage. If you have a professional liability plan, it will ensure your business is protected.


In the event a client files a lawsuit against your contractor business claiming negligence, or other covered claims, a professional liability policy will cover expenses to defend you, your entity and any representatives within your company. If the claim is fraudulent, this policy will still provide the finances for your defense.

Notice of Claim

This means that the professional liability claim must be filed within your policy period since coverage is only provided while the insurance is active.

Wrongful Act

If your company is accused of wrongful acts this can include negligence, professional errors and omissions or other breaches of services, your business will have protection under this portion of your policy.

Retroactive Date

This date refers to the day you started your contractor business. It is more than important to maintain continuous coverage because gaps in coverage will result in the declination of a claim. As part of the policy, your coverage will always pick up from the retroactive date if no gaps in coverage have been present.

Extended Reporting Period (tail) coverage

Extended reporting period exists to provide coverage for unreported claims that happened during the policy period but were discovered after the policy expired. If you had reported a possible incident to the carrier within your policy period, the extended reporting period will provide a certain amount of time after the expiration of the policy to file the actual claim. In this case, your policy would enforce the benefits of your coverage.

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