Protect your firm from claims of design errors, consulting mistakes, and project management negligence with E&O coverage tailored for construction professionals.
Coverage
Professional Liability Insurance for Construction
As construction firms take on expanded roles in design-build delivery, construction management, and owner representation, their exposure to professional liability claims grows substantially. Traditional general liability policies exclude claims arising from professional services such as design, engineering, project management consulting, and construction administration. A design error that leads to structural failure, a cost estimate that proves materially inaccurate, or a scheduling miscalculation that causes project delays can all generate professional liability claims that GL will not cover. ALKEME places professional liability insurance with carriers that specialize in construction professional risk and understand the nuances of design-build contracts, standard of care obligations, and the interplay between professional and general liability coverages.
Professional Services That Create E&O Exposure
Any construction firm that provides advice, design input, or management oversight beyond basic trade labor has professional liability exposure. Design-build contractors who prepare plans and specifications are directly exposed to design defect claims. Construction managers who oversee schedules, budgets, and quality control face allegations of negligent project administration. General contractors who provide value engineering suggestions or constructability reviews may be held to a professional standard of care for those recommendations. Even firms that subcontract all design work can face professional liability claims if they are contractually responsible for the design professional performance. ALKEME assesses each client service offerings to identify all sources of professional liability exposure.
Claims-Made Coverage Structure
Unlike general liability policies that are typically written on an occurrence basis, professional liability insurance is almost always written on a claims-made form. This means the policy in force at the time a claim is reported responds, regardless of when the alleged error occurred. Maintaining continuous coverage is essential because a gap in coverage can leave prior acts uninsured. When changing carriers, the retroactive date on the new policy must reach back to the original inception date to avoid gaps. If coverage is discontinued entirely, an extended reporting period or tail policy is needed to cover claims arising from past work. ALKEME manages these transitions carefully to ensure continuity of coverage for every client.
Contract Risk and Limitation of Liability
Construction professional liability claims often originate from contract disputes where the scope of professional services was poorly defined or where the contractor assumed liability beyond the standard of care. Contracts that include guarantees of results, fitness for purpose warranties, or indemnification clauses that exceed insurable risk can create exposure that professional liability policies will not cover. ALKEME works with clients and their legal counsel to review contract language before execution, identifying provisions that could void professional liability coverage or create uninsurable exposure. Limitation of liability clauses, mutual waiver of consequential damages provisions, and clearly defined scopes of service help keep professional liability exposure within insurable bounds.
Integrating Professional Liability With Your Insurance Program
Professional liability coverage must be coordinated with general liability, umbrella and excess liability, and pollution liability policies to eliminate gaps and overlaps. A construction defect claim may involve allegations of both faulty workmanship, which is a GL exposure, and negligent design, which is a professional liability exposure. If the policies are not coordinated, each carrier may attempt to shift responsibility to the other, leaving the contractor caught in a coverage dispute. ALKEME structures programs where the professional liability and general liability carriers understand their respective roles, and we advocate for coverage positions that protect the client when claims span multiple policy types.
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