DO GENERAL CONTRACTORS NEED PROFESSIONAL LIABILITY COVERAGE?
Commercial General Liability policies were not designed, nor do they include coverage, for Professional Liability. There is a perception that contractors do not need professional liability coverage, but this isn’t a safe assumption. Professional Services are generally those that require specialized knowledge, labor or skill, and this knowledge is predominantly intellectual, rather than physical. In other words, professional services are those in which providers are paid for what they know – for their professional opinions. We are accustomed to seeing Professional Liability exclusions for architects, engineers, surveyors, and other professionals. It’s easy to understand why many assume this exclusion does not apply to a contractor.
The troubling part of this perception has to do with some of the terms used in the Professional Liability Exclusion. Professional Services that are excluded may be “… preparing, approving or failing to prepare or approve…reports, field orders, change orders, supervisory…. [or] inspections …” Most General Contractors are probably engaged in some – or all – of these activities.
It’s important to be aware of this possible gap in a General Liability policy. You may want to consider obtaining a proposal for coverage for Contractor’s Professional Liability.