Contractors E&O: The Insurance Your Oklahoma Business is Probably Missing

Key Takeaways

Your Commercial General Liability (CGL) policy covers accidents, like bodily injury or damage to a client's other property.
CGL does not pay for the cost to repair or replace your own faulty work. This is a common, costly misunderstanding.
Contractors Errors & Omissions (E&O) is the specific insurance that does cover the financial loss from your own mistakes (e.g., the cost to re-do bad wiring).
In a single incident (like a leak), GL pays for the resulting damage (the water-damaged ceiling), while E&O pays for the cost to fix the mistake (tearing out the wall to fix the pipe)

Introduction

Imagine you’re an electrician on a commercial job in Tulsa. You misread a spec sheet, and the wrong wiring goes in. No one catches it until after the drywall is up and painted. Now, the client wants you to pay the $25,000 it costs to tear out the walls, re-run the wire, and patch everything back up.

Your first thought might be, “My general liability will cover it.” But it won’t.

This is the single biggest misunderstanding about insurance in our industry, and it can cost you your business. Let’s clear it up.

Why This Matters for Oklahoma Contractors

Your Commercial General Liability (CGL) policy is the foundation of your insurance. It’s what you show to get your license and pull permits. In Oklahoma, the Construction Industries Board (CIB) requires licensed plumbers, electricians, and mechanical contractors to carry at least $50,000 in CGL coverage.

But here’s the critical part: General Liability is for accidents, not mistakes in your work.

What GL Covers: It pays for bodily injury (a client trips over your toolbox and gets hurt) or property damage (you drop an AC unit and crack a client’s custom floor). It protects you when your work accidentally damages something else.
What GL Does NOT Cover: It will not pay for the cost to repair or replace your own faulty work. That’s because a GL policy isn’t a warranty on your skills.

This gap is called the "Your Work" exclusion, and it’s standard in every CGL policy.

Real-World Risks: The Gap in Action

Let’s make this simple. A plumber installs a new shower, but a fitting behind the tile isn’t crimped right. It causes a slow leak that ruins the drywall in the bathroom and the ceiling in the room below.

What General Liability Pays For: The resulting damage. Your GL policy would cover the cost to replace the ruined drywall and the damaged ceiling below.
What General Liability Rejects: The cost of fixing your mistake. The policy will not pay for the labor and materials to tear out the tile, open the wall, replace the bad fitting, and put the shower back together.

That "rip and tear" cost comes straight out of your pocket. In Oklahoma, disputes over build quality and workmanship are the most common reasons contractors get sued. This means your biggest risk is the one thing your main insurance policy is designed to exclude.

How Insurance Helps: Closing the Gap with E&O

So how do you protect yourself? With Contractors Errors & Omissions (E&O) insurance.

Think of it this way:

General Liability = Covers accidental damage you cause.
Contractors E&O = Covers financial loss from mistakes you make.

E&O, sometimes called professional liability, is designed specifically to cover the costs of re-doing your own faulty work.

Let’s go back to that leaky shower. With both policies:

GL covers the water damage to the walls and ceiling.
E&O covers the cost to tear out the shower, fix the pipe, and rebuild it.

Together, they create a complete safety net.

Here are a few more quick examples for Oklahoma trades:

For the HVAC Tech in Norman: You miscalculate the cooling load for a clinic, and the system can’t keep up. E&O can help pay to install the correct unit.
For the Electrician in Edmond: You install wiring that doesn’t meet code, and it’s caught after the walls are closed. E&O can cover the cost to tear out and re-do the work correctly.

Practical Tips to Protect Your Business

Insurance is for when things go wrong. Good business habits stop them from going wrong in the first place.

Use Rock-Solid Contracts: Put everything in writing. Define the scope of work, materials, and how changes will be handled. A clear contract is your best friend in a dispute.
Document Everything: Take photos before, during, and after. Keep notes of conversations. Get signatures on all change orders. This paper trail can save you.
Vet Your Subcontractors: Don’t just hire the cheapest crew. Check their references and, most importantly, get a copy of their insurance certificate.
Communicate Clearly: Keep the client in the loop. A quick phone call to manage expectations can prevent a small issue from turning into a big lawsuit.

Conclusion

Your General Liability policy is essential, as it’s your license to operate. But it’s not enough. Relying on it to cover a workmanship mistake is a gamble you can’t afford to lose.

Contractors E&O insurance is the tool that protects your work, your reputation, and your bank account. It fills the biggest gap in your coverage and gives you peace of mind. Talk to an insurance agent who specializes in construction and ask them about adding Faulty Workmanship or E&O coverage. It’s one of the smartest investments you can make in your business.

FAQs

Doesn't my General Liability policy cover my mistakes?

No. It covers accidents that cause injury or damage to other people's property, not the cost of re-doing your own faulty work.

Is Contractors E&O insurance required in Oklahoma?

While General Liability is often required for licensing, E&O is typically not mandated by the state. However, many general contractors and project owners will require you to have it before you can work on their job sites.

What’s the difference between "claims-made" and "occurrence" policies?

Most GL policies are "occurrence," meaning they cover incidents that happen during the policy period, no matter when the claim is filed. Most E&O policies are "claims-made," meaning the policy must be active when the claim is filed. This makes it important to keep your E&O coverage continuous.