Why You Need Construction Management Liability Insurance
June 23, 2015
Construction managers have a varied scope of responsibilities that can include obtaining and evaluating bids, scheduling work, budgeting, constructability reviews, and representing the owner’s interest on the job site. As the management firm becomes more successful, construction management liability insurance is definitely needed, since you may not be able to personally handle every aspect of each construction project.
Also known as errors & omissions (E&O) coverage, this policy insures not only your mistakes, but also any mistakes made by your employees and any independent contractors that you hire. An E&O policy helps protect those valued relationships you’ve developed by helping to protect your client as well as preserving your own financial security.
Mistakes can’t always be prevented
Accidents happen, and as a construction manager, you’ve come to realize that even the smallest mistakes can have serious consequences. Even the most skilled professionals will fall prey to making an error of some sort during their career. Anything, from a major equipment failure to oversights resulting in personal injury, can result in a costly lawsuit.
Any firm or individual that improperly performs services can become the focus of litigation from claims of causing a client to suffer an economic loss. The impact of a claim that has no merit can still be devastating. Most companies having no insurance simply don’t have the resources and expertise to defend against such a claim.
Having the right kind of E&O policy can protect both the construction management firm and subcontractors from claims of any perceived error or omission, even if the problem is discovered months after the initial job is completed. The high cost of a legal defense could even put your construction management firm out of business. You need to protect yourself against the impact of a lawsuit. Construction management liability insurance will pay for any resulting judgments against you, including court costs, up to the coverage limits on your policy.
Some of your clients may require that you and your subcontractors carry E&O insurance and simply won’t give you their business unless you carry this coverage. Even if they don’t require you to carry it, having some type of construction management liability insurance can help strengthen relationships with your clients and reassure them that your company will be able to meet its financial obligations under any circumstances.