Have you heard that over 90% of businesses are subject to lawsuits annually? These lawsuits can result from something as simple as service failures, negligence, or inability to deliver products. Therefore insurance protection is essential for all businesses, not just companies that contract. Various insurance policies for contractors can protect your company from these lawsuits. One of the best is professional liability policies. Let’s find out why.

What Is Professional Liability Insurance, and What Does It Include?

Contractors typically manage complex projects that require a variety of variables and parameters. Because contractors aren’t part of continuous teams, they usually engage temporary professionals to handle the various elements of the work.

The insurance protects contractors from legal action based on service errors and other damages due to repairs or damage. It covers any construction mistakes the contractors make or third-party vendors associated with their work.

Furthermore, it offers optimal protection for small as well as large-scale companies. It generally covers companies for mistakes, negligence, agreed-upon parameters violations, inaccurate information, etc.

What Are Costing Benefits When Deciding on an Insurance Policy for Professional Liability?

Suppose you are a contractor and a litigant. In such a scenario, one lawsuit can be a significant setback considering the multiple settlement costs, including court costs, plaintiff compensation, administrative costs, attorney fees, and other legal expenditures. It can result in the total closure of your company.

So, when you are deciding on the right professional liability insurance, take into consideration the following factors:

  • The magnitude of the business
  • Geographical location
  • Limits of insurance cover
  • History of claims

The price for professional liability insurance rises due to the higher risk of the project. But, you can adopt a few measures to keep costs and risk factors in check. They include:

  • Plan realistic schedules
  • Keep the two parties open by defining expectations clearly within the agreement.
  • Find reliable suppliers and subcontractors
  • Train employees properly onboard
  • Organize regular site inspections
  • Make sure you have a complete record
  • Make sure you are focusing on top-quality products and services

What Are the Various Types of Professional Liability Insurance Best Suited for Contractors?

Contractors can take advantage of two significant kinds of professional insurance policies for liability. They are:

1: Claims-Made Policy

The most popular form of professional liability insurance is a claims-based policy. It offers complete protection by covering any occurrence that might happen while the policy is in effect. However, you can’t get more than the coverage timeframe. Therefore, purchasing this insurance before beginning the project is recommended if you would like to cover the whole duration of the project.

2: A License for Occurrence

Occurrence-based liability insurance, like one covering claims, will cover all events during the coverage period. The benefit is that you can extend the range to other events that could take place after the specified duration of coverage. Occurrence-based liability policies operate as a per-event policy, which implies it has the individual’s range and the claims option.

Before selecting one of the professional liability insurance plans from the above list, compare the options or consult with your insurance provider to see which strategy best meets your requirements.

What Makes Professional Liability Insured Different from Builder’s Risk Coverage?

Professional liability insurance, and builders’ risk insurance policies, are top-rated in the construction industry. But, the subtle distinctions can aid you in selecting the best approach for your requirements. For instance, an insurance policy for professional liability policy requires a specific project structure to determine the coverage guidelines. But, a builder’s risk insurance is an excellent option to cover new projects without an established framework.

Although the policies are similar in protection conditions to those for the same type of loss, the contractor usually manages professional liability insurance. In contrast, the project’s owner arranges the builder’s risk coverage.

The Most Important Takeaways

Insurance for professional liability is essential for contractors who want to protect their businesses from unexpected damages and lawsuits. There are many options, including the occurrence-based or claims-based insurance policies they can select depending on their specific needs.

In the end, a provider is essential to professional liability insurance. Costing is a must. However, choosing the best insurance options for professionals on the market is necessary.

Commercial Insurance Ottawa believes in offering our customers top-quality services at affordable prices. We also provide specific insurance plans which you can tailor to the needs of your business. If this is something you’re interested in, get in touch with our team at (613) 454-5640 or email us at info@commercialinsuranceottawa.com to learn more.