Question

What is the difference between a &#x27;Builder’s Risk&#x27; insurance policy and &#x27;Professional Liability&#x27; insurance regarding the specific types of project losses they are intended to cover?

Accepted Answer

A Builder&#x27;s Risk policy covers physical damage to a construction project during the construction phase, while Professional Liability insurance covers financial losses caused by errors or negligence in the professional services provided by project participants. Builder&#x27;s Risk acts as property insurance for the structure itself, protecting against "perils" or specific causes of loss such as fire, windstorm, theft, vandalism, or lightning that occur at the job site. It ensures that if the partially built structure is damaged or destroyed, there are funds available to repair or replace the materials and labor already invested. Professional Liability insurance, often called Errors and Omissions insurance, protects architects, engineers, and consultants against claims that their professional advice, designs, or technical specifications were flawed. If a structural engineer incorrectly calculates the load-bearing requirements of a building, leading to expensive repairs or structural failure, Professional Liability covers the resulting legal defense costs and damages, whereas Builder&#x27;s Risk would not cover such design defects. In short, Builder&#x27;s Risk is triggered by physical harm to the building materials, and Professional Liability is triggered by professional misconduct or mistakes in judgment.

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What is the difference between a 'Builder’s Risk' insurance policy and 'Professional Liability' insurance regarding the specific types of project losses they are intended to cover?