Insurance 101: Contractor’s E&O

As a contractor, you work hard to satisfy customers and build your business But what happens if an unhappy customer makes a legal claim against you? Customers want the most bang for their buck and the competitive marketplace pushes you to keep prices low while still trying to make a profit

You want to do your best, but no matter how careful you are, mistakes or misunderstandings can happen A simple complaint can quickly become a legal dispute And even though a claim may be unjustified, you are still left with legal fees and lost work time Customer disputes can be costly, with legal fees and damages easily reaching thousands of dollars Many contractors aren't aware that these conflicts are not covered by their general liability policy

Most commercial general liability policies exclude "your work," "your product" and "impaired property" As a business owner, these items are considered part of your cost of doing business, but these exclusions can leave you exposed when mistakes are made on the job And it can be very expensive to buy separate insurance Fortunately, Errors and Omissions coverage, or E&O, can be included as a part of your insurance policy to help fill the gaps in your general policy where those mistakes might fall It's more affordable than a separate insurance policy and designed specifically for contractors like you

E&O is coverage for claims made by third parties during the policy period which allege property damage to "your work", "your product" and "impaired property" caused by a contractor's "wrongful act" in rendering or failing to render "contracting services" as defined in the policy For example, a tile installer was hired to lay new flooring However, he incorrectly measured the height of the subflooring As a result, all interior doors were unable to close over the new tile floor The subflooring and tile work had to be removed and reinstalled at the correct height

With E&O coverage, the contractor would not have to pay for those expenses out of pocket, subject to the policy deductible, saving him thousands of dollars! And, if the contractor had gone to court, E&O would also cover awarded damages and defense costs within the limit of the policy Every time you take on a project, you take on the risk of a customer dispute Don't let the threat of a lawsuit put your business and reputation in danger Ask your independent agent about E&O coverage today

Source: Youtube

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