What does professional liability insurance protect contractors against?

Professional liability insurance is specifically designed to protect contractors and other professionals from claims related to negligence, errors, or omissions that may occur in the performance of their work. This type of insurance addresses situations where a contractor's professional services lead to a client experiencing a financial loss due to a mistake in design, advice, or execution, even if the contractor did not intentionally cause harm.

In the context of construction and contracting, professional liability is critical because it covers claims that arise from instances where the contractor's work is deemed inadequate, incomplete, or not in compliance with regulations and industry standards. This can include situations where structural failures, cost overruns, or project delays occur due to the contractor's negligence or misjudgments.

Other insurance types address different risks. For example, natural disasters would typically fall under property insurance rather than professional liability. Workplace accidents concerning employees are generally covered by workers’ compensation insurance. Similarly, property damage claims against the contractor would typically be covered under general liability insurance. Thus, the focus of professional liability insurance is uniquely tailored to mitigate risks related to the professional services rendered by contractors.