Your company won a design-build job for a two-story medical office. You hired an engineer to design the steel, and your team value-engineered the connections to save weeks. Halfway through erection, the special inspector flags the connections. They don't meet the loads. Nothing has fallen and nobody is hurt, but the steel has to be re-engineered, reinforced, and partly replaced, and the opening date slips three months. The owner's claim lands on your desk.
Most contractors' first instinct is to call in the general liability policy. Here's why that call usually goes nowhere.
First question: was anything physically damaged?
General liability pays for bodily injury and property damage caused by an occurrence. Property damage means physical injury to tangible property, or loss of use of it. A design error that's caught in time usually produces none of that. It produces cost:
- Redesign and engineering fees
- Tearing out and replacing work that isn't damaged, just wrong
- Delay, extended general conditions, and the owner's lost rent
That's pure economic loss, and the GL insuring agreement generally doesn't reach it. If the owner frames the delay as loss of use, the impaired property exclusion usually closes that door. This is often why a design claim gets denied: not some fine-print exclusion, but the fact that the policy was never built for it.
Your own work: the "your work" exclusion
Suppose the error does cause physical damage, but only to your own project. Once the work is complete, the standard GL's "your work" exclusion removes property damage to your own work arising out of it. There's an important exception: it doesn't apply when the damaged work, or the work that caused the damage, was performed by a subcontractor. During construction, other exclusions remove the cost of fixing the part of the work done incorrectly.
Whether faulty work counts as an "occurrence" at all also varies by state. The practical point: even physical damage doesn't guarantee your GL will pay to fix a design-driven failure in your own building.
The professional services exclusion on your CGL
Many contractors' GL policies also carry a professional services exclusion. In these forms, professional services are defined broadly: drawings, specifications, change orders, reports, surveys, and related supervisory or inspection activities. Three ISO versions matter most:
- CG 22 43 excludes engineering, architectural, and surveying services by you or on your behalf. It's written for engineers, architects, and surveyors, and it's the broadest.
- CG 22 79 (Contractors, Professional Liability) also excludes design by you or on your behalf, including design you hire out. But it carves back the construction means, methods, techniques, sequences, and procedures you employ.
- CG 22 80 is the limited version suited to design-build. It excludes only design you render as an engineer, architect, or surveyor, so design you hire out for your own work stays covered for bodily injury and property damage.
None of the three pays redesign, rework, or delay without injury or physical damage.
The exclusion matters most in the worst case. Say a delegated shoring design fails and a floor collapses, injuring other trades' workers (your own employees go to workers' comp) and damaging the structure. That's bodily injury and property damage, squarely inside the insuring agreement. But under CG 22 79, if the injury arose out of design performed on your behalf, the exclusion can remove coverage anyway. Expect a fight over whether the cause was the design or your means and methods.
Where contractors pick up design without realizing it
You don't have to call yourself a designer to own design risk. It comes in through:
- Design-build, where you deliver the plans along with the building
- Delegated design, where the specifications push a system's design onto you. AIA A201-2017 §3.12.10.1 has the owner and architect specify the performance and design criteria and requires the contractor to have the work done by a properly licensed design professional whose seal appears on the submittals. That's common for fire sprinkler, HVAC, and solar racking work.
- Value engineering, where your proposed substitute becomes the design
- Design-assist, where your input shapes the engineer's drawings
- Engineered shop drawings and BIM coordination, where a missed clash or a wrong assumption is a design decision
Each one is professional services, and each can trip the exclusion.
What contractors professional liability does and doesn't cover
Contractors professional liability is built for this. It covers claims that your design, advice, or construction management fell below the standard of care. It also covers your vicarious liability for the engineers and designers you hire, which is the heart of most design-build claims. On many forms it includes rectification coverage, paying to correct a design error caught during construction before it becomes a claim, usually only with prompt notice and the carrier's consent. Like other professional liability, it's claims-made.
It isn't a construction defect policy. It generally excludes faulty workmanship, defective materials, express warranties that a design will perform, and cost overruns from inaccurate estimates.
Don't count on your engineer's insurance as the backstop. That limit is often modest, eroded by defense costs, and shared across every project the firm designed that year. The owner collects from you first, and you chase the engineer second.
The gotcha: the endorsement you never read
Here's the trap. Professional services exclusions often aren't on the policy you first bought. They show up at renewal, on a list of form numbers in the declarations, after an underwriter notices design-build revenue on your application. The certificate you send looks identical before and after. Some states require notice of a coverage reduction at renewal, but it's easy to miss, and nobody calls to tell you a CG 22 79 now sits where you had no exclusion at all, or that a CG 22 80 became a CG 22 79.
Then you sign a design-build contract, or accept a delegated design scope buried in Division 21, believing your GL will at least handle the injuries. It may not. Read your forms schedule every year, and before every contract that shifts design to you.
Our approach
At Cory Washington & Co., we read your contracts and specifications to find where design responsibility lands, then check which professional services exclusion your GL carries and whether it fits the way you build. Where design risk is real, we place contractors professional liability as a practice or project policy, and review your design subconsultants' limits instead of assuming they're enough. We serve general contractors and specialty trades that take on delegated design, and our guides to contract insurance requirements and subcontractor requirements cover the paperwork side.
Taking on design-build or delegated design work? Request a policy review and we'll read your exclusions against your contracts.
Frequently Asked
Does general liability insurance cover design errors?
Mostly no. General liability pays for bodily injury and physical property damage, so the usual cost of a design error (redesign, tearing out undamaged work, and delay) generally isn't covered. Many contractors' policies also carry a professional services exclusion that can remove coverage even when the design error does injure someone or damage property. Design risk belongs on a contractors professional liability policy.
What is the professional services exclusion on a contractor's general liability policy?
It's an endorsement that removes coverage for injury or damage arising out of professional services such as engineering, architectural, or surveying work. The common ISO versions for contractors are CG 22 79, which excludes design by you or on your behalf but carves back construction means, methods, techniques, sequences, and procedures, and CG 22 80, a limited version suited to design-build. CG 22 43, the broadest, is written for engineers, architects, and surveyors.
Do contractors need professional liability insurance if they sub out the design?
Often yes. In design-build and delegated design, the owner's contract usually runs to you, so the owner pursues you for the design error and you pursue the engineer you hired. That engineer's limit is often modest, eroded by defense costs, and shared across every project the firm worked on that year. Contractors professional liability covers your vicarious liability for the designers you hire.
Does contractors professional liability cover faulty workmanship?
No. Contractors professional liability covers errors in design, advice, and construction management services, not mistakes in the physical work. The cost to redo your own construction work, defective materials, and express warranties are generally excluded. Injury and damage from your operations belong on general liability.
This article is general information for business owners, not insurance or legal advice, and does not bind or alter coverage. Policy terms, eligibility, and pricing vary by carrier and state — confirm specifics with our licensed team before making decisions.