Which type of insurance protects a contractor against claims arising from professional errors or omissions in design or specification services?
Correct Answer
D) Professional liability insurance
Professional liability insurance (also called errors and omissions insurance) specifically covers claims related to professional services, design errors, and specification mistakes.
Why This Is the Correct Answer
Professional liability insurance (also called Errors & Omissions or E&O insurance) is specifically designed to cover financial losses resulting from mistakes, negligence, or omissions in professional services—including design work, specifications, and consulting. It fills the gap that general liability does not cover.
Why the Other Options Are Wrong
Option A: General liability insurance
General liability insurance covers bodily injury, property damage, and personal/advertising injury that occurs on a job site or as a result of operations. It does NOT cover claims arising from professional advice, design errors, or specification mistakes.
Option B: Workers' compensation insurance
Workers' compensation insurance covers medical expenses and lost wages for employees injured on the job. It has no relevance to design errors or professional service failures.
Option C: Commercial property insurance
Commercial property insurance covers physical damage to the contractor's own property, tools, and equipment. It does not protect against third-party claims related to professional services.
Memory Technique
E&O = 'Errors & Omissions' = design mistakes. Think of an architect's drafting errors — that's a professional service problem, not a slip-and-fall, so general liability won't help.
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