Mistakes. Even if you don’t want to admit it…everyone makes them. Is there coverage in a contractor’s Commercial General Liability policy for a mistake made? Maybe, but…maybe not. There’s no single definitive answer as there are many different scenarios, but at the end of the day an old adage seems to generally rear its ugly head—“Whatever can go wrong, will go wrong”.
This coverage is designed to respond to the existing coverage gap in most Commercial General Liability forms (Faulty Workmanship) that exclude coverage, in the event of a third-party demand, resulting from “property damage” to “your work”, “your product” and “impaired property” caused by a contractor’s “Wrongful Act” in rendering (or failing to render) “Contractor Services”.
Professional Liability Customer Profile
- General and Design-Build Contractors, At-Risk Construction Managers and Agency Construction Managers
Professional Liability Claim Scenarios:
A General Contractor (GC) was retained to construct a retail center using the design-build delivery system. The GC entered into an agreement with a design professional to provide the design for the project. The GC secured indemnification and hold harmless agreements from the design professional. During construction, it was discovered that the design professional had erred laying out the site plan, resulting in the retail center sitting several inches above the existing roadways. Correction of the problem was estimated to cost more than $1 million. The GC made a demand under the indemnification and hold harmless provisions of the design professional’s contract. Unfortunately, the design professional declared bankruptcy and the GC remained professionally liable to the project owner.
A General Contractor was contracted by a publisher to design and construct a book warehouse. Upon completion of the building, cracks developed in the second-floor slab of the warehouse. It was determined that the slab had been under-designed and required replacement. Cost for replacing the slab and moving and storing the books exceeded $725,000. The GC was held liable for the loss under professional liability arguments.
A contractor was retained by a project owner to provide a constructability review of prepared plans and specifications, and to perform a value engineering analysis for construction of a school. The contractor determined from the review that the HVAC system was undersized. The contractor recommended changes to the system which the project owner rejected due to cost. The system was undersized causing extra moisture, leading to mold growth. The school alleged that the contractor was responsible for the mold because it had failed to properly warn the owner of the consequences of an under-designed system. The contractor was held to be partially liable for failing to warn.
Errors and Omissions Customer Profile (Artisan Contractors)
- Carpenters Drywall Contractors Electricians Flooring
- Roofers Landscapers Concrete Masonry
- Painters Excavation Plumbers Sewer & Water
- Over 35 other Artisan Contractor categories
Errors and Omissions Claim Scenarios:
A Roofing contractor removes and replaces a flat roof with a bitumen roof. Shortly after completion of the project, sections of roofing began buckling and seams were compromised allowing water to penetrate. Contractors Errors and Omissions loss $1,250,000.
A Flooring contractor installs a wooden gymnasium floor over a concrete foundation that had the previous flooring adhesive removed using a mastic remover. A month after the project was finished, the new flooring adhesive began breaking down and flooring started releasing from the substrate. Contractors Errors and Omissions loss $110,000.
A Fencing contractor misread the site plan while installing a fence. The installed fence was over the property line and had to be removed and reinstalled along the correct property line. Contractors Errors and Omissions loss $35,000.
An HVAC contactor installed a new unit on the roof of a building but failed to properly secure the foundation support. The unit broke through the roof destroying the unit and causing damage to the building and personal property. A new HVAC unit had to be installed, and the building and contents had to be repaired. Damage to the building and content were covered under the General Liability. Contractor Errors and Omissions loss $25,000.
A Lawn Care specialist applied the wrong chemical to the lawns at a commercial office park. The turf died and was removed and replaced with new sod. Contractors Errors and Omissions loss $17,000.
A Tile installer incorrectly measured the height of the sub-flooring before beginning a new flooring job, resulting in the interior doors not clearing the new installed tile floor. The sub-flooring and the tile work had to be removed and reinstalled at the proper height. Contractors Errors and Omissions loss $10,000.
An Appliance installer incorrectly wired a 220-volt receptacle causing a new commercial oven to malfunction to the point a new oven had to be installed. Contractors Errors and Omissions loss $6,750.
A Carpet installer mistakenly installs the wrong carpet. The installer had to remove the carpet and replace it with the correct product. Contractors Errors and Omissions loss $3,000.