Unraveling the Maze: Understanding Rectification in Contractor’s Professional Liability Insurance

by: Lisa Grubbs, Marketing Manager – CRIS, MLIS, TRIP, ERIS, AFIS, MRIS

Rectification (also known as Mitigation) coverage is a key feature of a Contractors Professional Liability policy. Its purpose is to prevent what could be a time-consuming and expensive litigation process in pursuit of costs related to design, engineering or other professional service errors or omissions for which the contractor could bear responsibility. In contrast to General Liability claims, whereby a third party’s demand for compensation for damages caused by the contractor trigger coverage, Rectification claims are “first party”. This means that the contractor triggers coverage by notifying the Professional Liability insurance company that they identified an error or omission in design, engineering or other professional service – and due to their possible negligence in some regard, if not rectified or mitigated, could result in being liable to a third party.

The objective is to address the issues via Rectification (Mitigation) coverage before they escalate to a problematic level that could further disrupt the project, negatively impact the relationships among the parties and potentially lead to legal action. The provisions of the Professional Liability policy require the contractor to obtain approval from the insurance company prior to agreement to remedy any facet of the design, engineering or construction. It is always important to inform the insurance company of any circumstance or incident involving a professional service-related error or omission in accordance with the policy’s reporting requirements to receive the most beneficial coverage response and increase the likelihood of a positive resolution.