Do Contractors Have the Coverage They Think They Do?

Do-overs can be good after making a mistake, but for construction contractors, there are a lot of downsides to redoing work. “Ripping and tearing out” construction materials after identifying an error can be costly, delay the completion of a project and damage the contractor’s business relationships. Even worse is the unpleasant discovery that such rework may not be covered by the contractor’s professional liability policy.


Many retail agents and their insureds are unaware that the vast majority of insurers writing professional liability coverage for contractors with no design responsibilities on a project do not provide coverage for redoing work. The act of ripping and tearing out material to correct a design error may be described in insurance policies by several different terms, such as “rectification,” “mitigation of damages” or “faulty workmanship.” Adding to the confusion, some policy wordings are silent on this topic.

Here is a common example of rectification in a commercial building:

A plumbing contractor, referring to the building layout created by a design firm, installs a drain line that, due to an error in the layout, is offset by 6 inches. The difference seems small but prevents the contractor from attaching fixtures and finishing a bathroom to meet the building owner’s requirements. Already on a tight schedule, the plumbing contractor realizes that rectifying the mistake will take at least a day, not counting the time needed to procure replacement pipe and materials for fixing the structure around the drain line. And the contractor’s workers will incur overtime.

Without specific coverage for this and similar scenarios, the contractor’s options are limited. Even though the error may have originated in the building design, the design professional’s architects and engineers errors and omissions liability policy does not extend coverage to subcontractors. Recovering from the design professional will likely require a finding of negligence, and litigating may be even more expensive than the rectification. Even if the contractor’s professional liability policy does cover rectification costs, coverage is limited to materials, not extra wages or overtime pay. The contractor is going to incur expenses for the rework — the question is, will any of those expenses be covered?


Retail agents can help ensure that contractors grasp their exposure to rectification costs, clearly understand what their insurance will and will not cover, and avoid coverage gaps. Agents can also emphasize the importance of good practices, such as documenting worksites before and after construction, and following up on any questions before commencing work. The carpenter’s rule of “measure twice, cut once” is sage advice when it comes to properly preparing for any form of construction work.


Insurance policies vary, and their titles don’t necessarily match policyholders’ coverage expectations. There is no substitute for understanding the insurance contract and having the support of an experienced partner. Working with a wholesale specialist who understands the marketplace and who is willing to meet in person to find creative solutions to coverage challenges is a good way to help contractors manage their exposures.

Contact your CRC Group producer for more information.


  • Linda Caruthers is a Director in CRC's Minneapolis, MN office and member of the ExecPro practice group.
  • John Becker is a Director in CRC's Salt Lake City, UT office and member of the ExecPro practice group.