What is rectification coverage?
Rectification coverage is first party coverage when there is a design defect circumstance. This coverage allows an insured to report a design defect circumstance to their carrier without waiting for suit by their client. This keeps projects on schedule and uninterrupted. An additional benefit is that this coverage will help resolve a circumstance faster and without creating animosity between the insured and their client. Full policy limits are available. This coverage is part of our professional liability policy for general contractors.
Should I purchase an E&O policy or a professional liability policy?
Typically, general contractors and firms who provide design without the responsibility for construction should purchase our professional liability policy. All other specialty-type contractors, with or without a professional exposure, should purchase our errors & omissions policy.
Can I purchase Artisan Contractors E&O without pollution liability coverage?
Yes, we have several options to meet your needs. The policyholder has the option to purchase 1) combined Artisan Contractors E&O and pollution liability; 2) Artisan Contractors E&O without pollution liability; or 3) Artisan Contractors E&O and a separate, stand-alone pollution policy. Option number three is best for firms that need separate pollution liability limits.
I don't have a design exposure, can I still get Artisan Contractors E&O coverage?
Absolutely. We can underwrite contractors with or without a professional design exposure.
What is design liability?
When a design professional provides design services, the law states that they must act in accordance with the professional standard of care. That means that he or she must act just as any other design professional would facing the same or similar facts and circumstances. This requirement - to refrain from negligence - holds true whether the design professional is working on his or her own or for a contractor.
Why should a contractor care about a design professional's design liability?
Today many architects and engineers work directly for contractors. And if a design professional works for a contractor, the contractor is liable for the performance of that architect or engineer's services. The contractor can be held legally responsible if the design professional is found to be negligent in any way.
Contractors can also be held liable for A/E negligence if they hire the design firm as a subcontractor or combine with the A/E firm in a joint venture. That's why when a contractor enters into a design-build agreement with an owner, the contractor usually is required, either directly or through its designer, to carry professional liability insurance to cover this exposure. If AGC Document No. 410, for instance, is used in the agreement, the contractor is required to obtain professional liability insurance.
It's also possible that the contractor may have design responsibility and liability even under the traditional design-bid-build project delivery method. However, even though the services are to be provided by a licensed design professional, the risk is still that of the contractor.
OK. But why do contractors need a design liability policy?
Design exposures and losses are not covered by most Commercial General Liability (CGL) policies. Design exposures are the costs required to remedy negligent design and any necessary reconstruction. When a contractor assumes a Single Point of Responsibility (SPR) role with an owner by use of the design/build project delivery, they are providing project design in addition to their construction obligations. The design exposure assumed under an SPR contract may be direct, in the case of a contractor's own in-house design team, or it may be indirect as a result of subcontracting the design to a design firm. Most CGL policies exclude both exposures.
Why doesn't the CGL Policy cover the design exposure?
First, CGL policies typically provide coverage only for bodily injury (BI) and property damages (PD), as defined in the policy. The definitions of BI and PD usually do not include remedial design and reconstruction of negligent design and other associated damages such as delay claims, loss of use and other economic damages. Second, many CGL carriers are not comfortable with the design exposure presented by either design/build or design delegation and, therefore, place a professional services exclusion on their CGL policies. This will exclude all claims submitted under the CGL policy that arise from design-related services.
What does the Contractor's Program cover?
Our program is designed to meet the specific needs of contractors responsible for design services.
Design Liability
The policy covers contractors for their liability arising out of the performance of professional services rendered by its in-house design staff who are legally qualified architects, engineers, land surveyors, landscape architects and construction managers. The policy also covers the contractor for its indirect design exposure arising out of the performance of professional services rendered by outside design professionals it contracts with when performing design-build projects or design that has been delegated under the provisions of AIA A-201 General Conditions Document.
Agency and At-risk Construction Management
The policy also provides coverage when the contractor is performing construction management services as the owner's agent; an arrangement commonly referred to as Agency Construction Management. Also, where the contractor is acting as the owners agent and holds separate contract(s) for the construction of the project, this is referred to as At-Risk Construction Management. Such construction management services must be defined in a written contract with the client.
Faulty Workmanship of Sub-contractors
When the contractor is providing Agency or At-Risk CM services or acting as a design-builder, the policy covers the failure to detect construction not in accordance with the construction documents. There must be a contract with a fee for CM services that define the construction management services provided. So, coverage is not provided for the failure to detect faulty workmanship of others under an owner-contractor agreement where the contractor is simply providing general supervision of construction.
Pollution Coverage for Job Site Activities
Contractors Pollution Liability (CPL) coverage can be provided either as a stand-alone policy or under a combined Contractors Professional and Pollution Liability Policy. The CPL forms provide coverage for pollution claims arising from the job site activities of the contractor or its subcontractors.
Coverage at a Glance
- Coverage for design errors and omissions
- Coverage for failure to detect or quantify the presence of pollutants (Pollution Coverage)
- Coverage for pollution claims arising from job site activities
- Joint Venture coverage
- Worldwide coverage - both indemnity and defense
- Agency and At-Risk Construction Management
- Faulty workmanship of subcontractors