In the world of commercial real estate development, slow and steady will win the race in the next few years. According to development company JLL, the industry is set for minimal yet stable growth even amidst the uncertainty of the coronavirus outbreak. And while the industry isn’t expected to see a drop in activity anytime soon, it’s the perfect time for companies to be reviewing their contractor professional liability policies.
These policies take care of damages coming out of acts, errors and omissions from professional services performed by or on behalf of a construction company, including construction managers, subcontractors, or general contractors. With this in mind, it’s important to look at the evolution of contractor professional liability policies and what to expect moving forward.
Growth in the Market
The contractor’s professional liability market has seen a significant growth in recent years, hitting a capacity of $300 million in the U.S. Contractual commitments are the major incentive for purchasing both practice and project programs. The frequency of contractor’s professional liability claims is continuing to climb as some major carriers are reporting an increase of as much as 20 percent every year.
The market is also seeing an expansion of project policy terms and extended reporting periods. Typically, the maximum duration of a program was 10 years, but many carriers are extending that period. Another trend in the professional liability market involves combining contractor’s professional liability with pollution liability.
While these general trends are important to stay on top of, it also helps to see what new types of coverage or innovative changes in coverage there are for clients. They include:
Recently, carriers in the industry have incorporated protective language into their policies that expedites claims resolution. The reason behind this move is to resolve disputes more quickly during construction projects that need to be kept on schedule. This involves needing to validate and value a claim shortly after one is submitted, which can benefit all parties included in a project.
This coverage can benefit projects in need of prompt resolution of issues so that construction on a project can carry on. While this coverage may move money around to relieve design-related issues during construction, it can also be a contest coverage because it imposes the need to prove damages, which may compel the insured party to be more upfront and transparent about the recoverable amount of money under a policy.
With proactive coverage, a carrier of professional liability insurance for contractors receives all the information they need regarding a claim for design liability, then validates the claim before ultimately paying for a portion of it. Once this payment is submitted and is shown to the carrier, then a more realistic settlement is processed instead of continuing a long litigation process and running the risk of a bad faith issue.
About Genesee General
At Genesee, we strive to provide quality insurance solutions for the Commercial E & S sector. Our longstanding expertise has allowed us to successfully serve your clients for over three decades. Our specialized products include coverages for Transportation, Garage, P & C, Professional, Brokerage Property, Specialty Programs and many more. For more information about our products, we invite you to contact us today at (800) 282-8755.