Rectification coverage is a distinctive and valuable feature offered by Victor, included in both Victor’s Architects & Engineers and General Contractors professional liability policies. This coverage is available to firms of all sizes, from small practices to larger organizations.
What is rectification coverage and how can it benefit policyholders?
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Rectification coverage explained:
Rectification coverage is a specific type of professional liability coverage that is particularly valuable for design professionals. It provides financial protection when a contractor or design professional takes responsibility for correcting construction errors.
Insureds are now able to self-report an early spotted error which needs to be corrected before it becomes a full-blown expensive claim. This is an important distinction as traditional claims are normally only be brought by a third-party after the damage is done.
In the current insurance market rectification coverage can normally be purchased (if offered at all) for an additional cost by endorsement. However, our policy automatically includes this coverage for no extra cost.
Key benefits of rectification coverage include:
- Financial protection: Provides insureds with funding to help expedite the early resolution of design errors that arise during construction and prevent subsequent claims.
- Protects and maintains reputation: It can help resolve a circumstance faster and without creating discord between the insured and their client.
- Peace of mind: Knowing that rectification costs are covered allows design professionals to focus on their work without the constant worry of potential financial repercussions.
- Saves time and money: Saves time and money by preventing costly delays and allowing projects to move forward.
See this policy feature in action
XYZ Construction Co., a general contractor, was hired to design and build an addition to a restaurant.
Shortly after the project began, the contractor noticed the building slab which had just been poured was showing signs of defect. Without repairs, it is likely the foundation would crack and lead to other structural issues.
Realizing this issue would turn into a claim, the firm looked for assistance from their insurance carriers in mitigating the situation. The firm’s general liability policy did not provide any coverage, but their professional liability insurance policy offered the perfect solution, rectification overage.
XYZ Construction’s proposed solution was to remove the building slab that was poured, backfill the site to the appropriate level, and re-pour the slab. The cost for labor and materials was $75,000, much less than if they had to correct the problem after the project was completed. Also, time delays would have exasperated the issue. It would have taken months to investigate, correct, and pay the claim. The lost revenue claim, alone, would have been substantial.
Because the firm’s professional liability insurance policy included rectification coverage, the potentially significant issue identified during the project was corrected before getting out of hand. The proposal for correction was submitted to the carrier and approved for payment. XYZ Construction was able to complete the repair and the restaurant opened.
To learn more, email design.us@victorinsurance.com or connect with your business development contact.
