Contractors Errors and Omissions

Provides claims-made coverage for damages the insured legally must pay for faulty workmanship, material, design or product because of he insureds negligent acts, errors or omissions from a defect in material or in a product sold or installed by the insured while working as a contractor.

In the standard ISO Commercial Liability Coverage Form, the following 4 exclusions limit the protection available to contractors.

• Exclusion K - Damage to Your Product
• Exclusion L - Damage to Your Work
• Exclusion M - Damage to Impaired Property or Property Not Physically Injured
• Exclusion N - Recall of Products, Work or Impaired Property

For example:  The insured is a plumber hired to handle all of the plumbing for a new residence.  The job is completed, and shortly afterwards, a pipe breaks because the plumber incorrectly installed a coupling.  Not only is the pipe damaged, but there is also damage to the floors, walls and carpeting from the water that escaped. There is no coverage.

If the contractor improperly installs af product or installs a defective product, the CGL form provides protection against subsequent damage caused by the error, but no coverage applies to the property installed by the contractor.  This leaves the contractor with the bill to replace the entire product originally installed.  This can cost the contractor tens of thousands of dollars depending on the size or the original contract. 

With the Errors & Omissions Policy: 

"We will pay the sums that the insured becomes legally obligated to pay as damages because of property damage to your product, property damage to your work, property damage to impaired property or recall expense that arises out of your product, your work or any part thereof.  The damages must have resulted from the Insured's negilgent act, error or omission."

Contractors Errors and Omissions Coverage effectively eliminates these exclusions thus filling this gap in products/completed operations coverage.  Limits are the same as the general liability coverage written for the contractor except that a $1,000 deductible applies.

The following types of contractors are eligible for this coverage:

• Air Conditioning Systems or Equipment
• Ceiling or Wall Installation
• Door, Window or Assembled Millwork
• Drywall or Wallboard Installation
• Electrical Work - Within Buildings
• Fence Erection Contractors
• Floor Covering Installation - not Ceramic Tile or Stone 
• Furniture or Fixtures - installation in offices or stores
• Grading of Land
• Heating or Combined Heating and Air Conditioning Systems
• Painting - exterior or interior 
• Paper Hanging
• Plastering or Stucco Work
• Plumbing - commercial or residential
• Refrigeration Systems or Equipment
• Driveway, Parking Area or Sidewalk Paving
• Siding Installation
• Tile or Stonework