Why Every Contractor Needs Faulty Workmanship Coverage in Their Insurance Policy

By Jenny Holly Hansen | Langley News | November 27, 2025

When you’re a contractor, your reputation is built project by project—brick by brick, detail by detail. But even the best tradespeople face risks. A project might not meet outlined specifications, a component may be installed incorrectly, or a subcontractor’s mistake could cause costly downstream damage.

That’s where Faulty Workmanship Coverage becomes not just a smart choice, but a vital safeguard for your business.

What Is Faulty Workmanship Coverage?

Faulty workmanship coverage protects contractors from the additional costs required to repair or replace damage that arises directly from their own work when that work doesn’t meet the required standards or specifications. This includes situations such as:

• Materials installed improperly
• Work failing to meet engineering or architectural specifications
• Errors in construction that trigger further damage during a project

Why It Matters: Real-World Scenarios

Contractors often underestimate how quickly a small mistake can escalate:

1. A Small Error Becomes a Big Cost

A misaligned flashing detail leads to water intrusion. Repairing the flashing alone? That’s on the contractor. But replacing damaged drywall, insulation, flooring, and paint throughout a unit?
Faulty workmanship coverage can step in to cover these secondary damages.

3. Specs Not Met = Entire Sections Redone

If a structure doesn't meet specified tolerances, the surrounding work often must be dismantled and rebuilt. The collateral damage can far exceed the cost of the original task.

These situations quickly move beyond "fixing a mistake" and into tens or hundreds of thousands of dollars in additional damages—costs many contractors can’t absorb out of pocket.

What Makes Faulty Workmanship Coverage Different?

General liability policies exclude the cost of repairing your own work. This is a detail many contractors don’t realize until they’re in the middle of a dispute or claim. Faulty workmanship coverage fills that gap by protecting against:

• Damage to completed work that results from a defect
• Damage to other areas of the project caused by the fault
• Expenses incurred to restore the project to the condition it should have been in

This ensures contractors aren’t financially devastated by issues they couldn’t fully anticipate.

A Shield for Your Reputation and Relationships

Construction is built on trust. Clients need to know that if something goes wrong, you have the systems—and coverage—in place to make it right without delays, disputes, or financial strain. Having faulty workmanship coverage:

• Protects your business cash flow
• Demonstrates professionalism and preparedness
• Supports long-term client relationships
• Keeps projects moving forward even when setbacks arise

It’s a layer of protection that preserves both your livelihood and your character as a contractor.

The Bottom Line

Faulty workmanship coverage isn’t just an add-on—it’s an essential part of a contractor’s risk management strategy. It protects against the ripple effects of honest mistakes, keeps your business financially stable, and safeguards the trust you’ve worked hard to build.

If you’re a contractor—or work with contractors—take the time to ensure your policy includes this crucial protection. It could be the difference between a minor setback and a major financial loss.

Let’s Keep Talking:

Jenny is a business insurance broker with Navacord. With 19 years experience, she will well versed in the technical aspects of business insurance coverages.

She can be reached at 604-317-6755 or jenny.hansen@navacord.com

Connect with Jenny on LinkedIn at https://www.linkedin.com/in/jenny-holly-hansen-365b691b/.  

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