Contractor's Professional Liability Insurance (CPL)

Definition - What does Contractor's Professional Liability Insurance (CPL) mean?

Contractor's professional liability insurance (CPL) is a type of commercial insurance that protects contractors from the financial hazards associated with making errors or omissions while they are designing and constructing buildings. It is designed to address the specific design liabilities a contractor faces. Coverage may apply on an annual or a project-to-project basis.

Insuranceopedia explains Contractor's Professional Liability Insurance (CPL)

In the past, contractor's professional liability coverage, if offered, was often a rider to a design liability insurance, and it only usually covered vicarious liability. In other words, it would protect a contractor if another party they hired, such as an engineer to advise on construction design, made an error or omission.

Because some contractors have since taken on the role of designing and building, instead of hiring third parties like architects and engineers, insurers have developed specialized coverage in the 1990s to cater to the then emerging market. Therefore, contractor's professional liability coverage is more widely available as a separate policy, and it covers the direct liability associated with design-build work.

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