The Summit

Beacon Hill Associates A publication of Beacon Hill Associates

Increasing Demand for Contractors Professional Coverage

Contractors requiring Professional Liability insurance in addition to their Pollution needs is increasing in prevalence and will continue to be a trend this year.

Contractors Pollution Professional is a growing product in our marketplace that is providing coverage options and enhancements customized to the insured. Contractors requiring Professional Liability insurance in addition to their Pollution needs is certainly increasing in prevalence and will continue to be a trend this year. It is easier and quicker for insureds to have this type of policy in place when bidding on projects although more contractors are understanding the value of having Pollution & Professional coverage regardless of contract requirements. Seeing the latest news stories on claims and lawsuit payouts have shown contractors they have professional exposures not only from their operations, but also operations performed on their behalf.

Some contractors may not provide a “professional” service, but they have professional exposures from jobsite modifications, supervision of subcontractors, or adherence/knowledge of local ordinances. While electricians, plumbers, roofers, etc., are not the architects or engineers on a job, occasionally they need to make jobsite modifications. An example of this may be an HVAC contractor rerouting or resizing ductwork. While these changes are often made to avoid problems on the jobsite, not implementing design changes for defects is also an exposure. In the case of the HVAC contractor, if excessive moisture accumulates in the air duct because of a particular duct configuration, mold will grow.

What coverage enhancements should I be looking for?

Similar to your Contractors Pollution Liability (CPL) policy, there are several enhancements that may be included or easily added such as: Transportation Pollution Liability, Non-owned Disposal Site, Named Insured’s Location, Mold coverage, Crisis Management, Emergency Response costs, Defense Outside the Limits, Per Project Aggregate, Restoration/Replacement Costs, Natural Resources Damages, Temporary Premises Storage, Jobsite Loading and Unloading, Additional Insured for ongoing and completed operations, Waiver of Subrogation, and Primary Noncontributory. Be sure to review your policy’s definition for Bodily Injury if it provides medical monitoring and/or if it provides mental anguish not tied to physical injury. Comparing the pollutant or pollution condition definition is also important as they are not the same for all carriers.

With expanded Contractors Professional programs, we are able to add more than Professional Liability to our CPL policies. It is now common to see enhancements like Mitigation/Rectification Expenses and Protective Indemnity coverages added as well. Let’s review the differences in these coverages: 

  • Professional Liability indemnifies a third party for the liability arising out of negligent act, error or omission in the performance of professional services by the or on behalf of the insured.
  • Rectification and/or Mitigation of Damages indemnifies the insured for expenses incurred by the insured in connection with a negligent act, error or omission arising from professional services performed by or on behalf of the insured that would have resulted in a professional liability claim.
  • Protective Indemnity Coverage indemnifies the insured for damages incurred by the insured that they are legally entitled to recover from a design professional excess of the design professional’s Professional Liability policy.

Be sure to review the definition of professional services as each insurance carrier’s wording is different. It is important this coverage definition is broad enough to be applied to the insured’s operations. Some policy forms’ definition can be more limiting than others, but you can also have this scheduled for your insured.  You may need to schedule your insured’s specific operations.

Contractors Pollution Professional will continue to be a rising product this year. The market’s enthusiasm is sparked by the increasing awareness of exposures and the ease of securing this coverage. Adding Professional for those who do not currently carry coverage will soon become a necessity. And not discussing/offering it to your insured may lead to your own professional exposure. Underwriters are excited to see these opportunities, whether it is enhancing a renewal or writing a new account. Contractors Pollution Professional provides the coverage needed to protect our insureds in today’s market. 

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