The list of exposures that construction business owners face is extensive, and there’s no shortage of potential lawsuits that they can encounter. Recognizing the risks starts with identifying the scope of exposures that arise from the various types of services performed for clients. In this article, we’ll examine why construction business owners should carry professional liability insurance and what types of services rendered require specialized liability protection. In addition to sharing this information with your clients, protect their entire operations with a comprehensive Construction Professional Liability Insurance program.
Do your clients need Professional Liability Insurance?
Your clients might choose to forego coverage in an effort to save money. However, if they can answer “yes” to any of these questions as prepared by the International Risk Management Institute, they need this coverage:
- Does your firm enter into explicit design-build or construction management contracts?
- Does your firm perform services for a fee that involves no “hands on” construction work?
- Could failure to exercise the appropriate degree of skill and care cause harm to others?
- Does your firm employ licensed professionals – primarily architects or engineers – or does your firm contract directly with these professionals for services?
Liability risks for phases of project completion.
Depending on the phase of the project, professional liability risks can vary from high to low risk.
- Design: This is a high-risk phase for construction owners. According to Construction Business Owner, liability exists even if all design is subcontracted and the design firm purchases professional liability insurance. Subcontracting even small portions of a project’s design, such as mechanical, electrical and plumbing results in vicarious liability for the general contractor (GC)/construction manager (CM). Professional liability exists when providing constructability reviews, value engineering and when making field changes to designs.
- Management: Project management continues from the beginning of the project through. However, if the construction owner claims to be a construction management specialist, or advertises as such, the consultant role is inevitably assumed. This puts the construction owner at risk.
- Subcontractors: This is considered a medium risk for construction owners. Hiring subcontractors to design projects or oversee them can create some confusion when it comes to communication, insurance, scheduling and payment.
About Genesee General
At Genesee General, we strive to provide quality insurance solutions for the construction sector. Our longstanding expertise has allowed us to successfully serve your clients for over three decades. For more information about our products, we invite you to contact us today at (800) 282 – 8755.