What Is Contractors Professional Liability Insurance?
Nov 19, 2023 By Susan Kelly

A type of liability insurance that offers protection to builders and contractors professionals against construction errors. CPL insurance is bought by contractors who provide services in the areas of design and construction. It provides coverage for errors made by contractors and errors committed by third parties, such as architects, engineers, and other contractors.

Understanding CPL

Contractors professional liability insurance shields builders and contractors when construction mistakes occur in the construction phase of a building project. The process of designing and building the structure is an intricate process that involves numerous parties, such as engineers, architects, designers as well as building contractors, and other specialists in building.

Contractors and Third-Party Hires

Contractors can engage third parties to manage different aspects of their projects, for example, engineering assessments or design work, as well as employing subcontractors to handle aspects such as construction work that requires special expertise, like electrical work, plumbing, or the installation of drywall.

Larger contractors can provide these services on their own. This lets them earn more money and exposes them to greater risk. The insurance offered to contractors professional liability is designed to shield contractors from such risks even when they perform the majority of the work themselves. CPL insurance shields contractors from mistakes made during the engineering and design process and is particularly useful in projects with many professionals involved in various areas of the work.

The policies are designed to protect against the risks not that are covered under generally-owned commercial liability insurance, which might not cover the exclusion of professional liability. Contractors professional liability insurance provides third-party liability protection, pollution liability, and first-party indemnity. The coverage covers damages that include financial loss and the cost of repairs.

What Is Covered Under CPL?

The coverages for the activities listed in the policy could be listed in the list of activities covered within the insurance contract or might be specific to the company that took out the purchase. Most policies will include an itemized list of the specific activities that are not covered under the coverage. Contractors can purchase a legal liability policy for professionals that protects the work that contractors perform and can also purchase an insurance policy that covers certain projects with a limited time frame.

CPL vs. Builders Risk Coverage

CPL insurance, as well as builders risk coverage, protect the same set of conditions and loss types as other entities that are who are involved in a construction project. However, CPL insurance is typically taken out by a contractor. On the other hand, builders risk coverage is usually purchased by the person who owns the building. Additionally, professional liability insurance is available for construction projects, but it is not applicable for a new construction project without a structure. However, builders risk coverage can safeguard projects that don't already have a structure.

What Is General Liability Insurance For Contractors Include?

Bodily injury

If a person falls and trips to the work site where you're working, it could mean that you're accountable for the injuries they sustain. If the victim sues you and you are liable, the general liability coverage could assist in covering the legal fees, medical expenses, and settlement expenses. General liability insurance won't provide coverage for any injuries sustained by employees; to be covered, you'll need worker's compensation insurance.

Property damaged

If you're working on a renovation for a client's home and damage furniture during your work, you could be held accountable for the damage. General liability insurance will pay for the cost of replacing or repairing furniture in addition to legal expenses if the customer sues for property damages. General liability policies will cover damages to a third-party property only. Business property insurance is required to safeguard your commercial assets.

Personal and advertising-related harm

If an employee for you as a contracting employee is accused of making false claims about a general contracting firm and that company sues the company for Slander, the general liability policy could help pay for the legal and settlement costs. The policy can also cover personal injury claims that arise from copyright infringement, as well as Libel.

Liability for complete operations

If you work on plumbing repairs at the home of a client and a pipe that you installed ruptured after a couple of months, you are accountable for the damages as you were the one who performed the work. General liability insurance for contractors will assist in covering legal expenses and any court-ordered damage.