Understanding the Errors and Omissions Exclusion

picA construction manager is hired by a project owner to manage the entire project from start to finish. Their scope of work varies greatly from coordinating and supervising subcontractors to administrative services.  A project owner places their trust in the construction manager to achieve the overall goal of producing quality work with little delay at the smallest cost possible.

Why does a company or individual need E&O insurance coverage? Say you were to make a mistake that cost your client hundreds of thousands of dollars and put their reputation and your reputation at stake; who would pay the loss? Human error and mistakes happen but they are not covered under a general liability policy. Fortunately, an E&O policy can help cover these mistakes.

The International Organization for Standardization (ISO) provides endorsements to the Commercial General Liability (CGL) Coverage Form that addresses construction risks. One of these endorsements is CG 22 34, Construction Management Errors and Omissions. It can protect the construction manager against a client if they claim they failed to perform as promised in their contract.

The larger your project is, the harder it is to personally handle every aspect of a project. Errors and Omissions coverage can help cover not only your mistakes, but your employee and independent contractor’s mistakes as well. If you are interested in an Errors and Omissions policy, or you would like to learn more, visit AssuredPartners NL Construction.

Sources: PropertyCasualty360, ISO, Insurance Journal

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