As a general or specialized contractor, you might feel like most of your work gets done through getting your hands dirty. Yes, that’s true, but you provide a lot more than just the work itself. You might also provide a variety of consulting, advice and professional services. Should mistakes occur in that line of your work, then you might cause a significant problem for yourself and your customers—one that you might have to pay to fix. An errors & omissions insurance (E&O) policy might help you do so, so make it part of your insurance package.

Understanding E&O Insurance

An errors & omissions policy is a type of business liability insurance. It applies to a particular type of mistake that you might make that harms others. While your general liability policy might apply when you damage their work-in-progress, this coverage applies when your advice, or a failure to do your work properly, causes problems.

In these cases, a client might experience a significant personal loss. Should they blame your services, they might demand compensation, or worse, sue you. In these cases, the E&O policy can step in to cover many, if not all, of the related costs you might incur. Therefore, your business’s ability to recover from such a loss is much more assured.

Why Contractors Need Coverage

People frequently think that an E&O policy is more appropriate for those in the professional service industry, like lawyers or doctors. However, the contracting industry has a need for this coverage as well.

Think of it from this perspective. As a contractor, you don’t just build items. You must plan and design projects, give advice on how the work should proceed, and ensure it wraps up correctly. If you make mistakes during this time, then an E&O policy might help you pay for your losses. Suppose that you redesigned someone’s bathroom, but failed to install appropriate piping under the sink, which on its first use ruptures.

As a result, the client might hold you responsible for these losses, and they could sue you. You might have to pay for the repairs and property damage, not to mention the costs of lawsuits that might arise. Therefore, coverage will take great strides to protect contractors, and make the business more secure in the future.