As a government contractor, you operate in a high-stakes environment where precision, compliance, and accountability are nonnegotiable. Every project must meet strict federal standards and withstand regulatory scrutiny. Those expectations expose your business to significant professional liability risks that can result in costly claims or contract disputes. The right insurance for government contractors protects your reputation, finances, and ability to secure winning bids.
Design and construction errors, where even minor miscalculations can lead to significant claims, are among the most common and costly exposures for government contractors.
Miscalculations, engineering flaws, or faulty specifications can lead to project delays or failures. Such errors often result in claims for negligence or breach of contract, especially when safety or performance standards are not upheld.
Software malfunctions, data breaches, or technical missteps in GovTech systems can expose your business to financial loss and compliance penalties. Professional liability coverage often overlaps with cyber protection to address these complex risks.
If your consulting or advisory services lead to an agency's financial loss, even unintentionally, you may face claims for errors or omissions. Government projects rely heavily on documented accuracy and expert judgment.
Missed deadlines, incomplete deliverables, or unclear performance expectations can trigger breach-of-contract claims. Many federal contracts include "liquidated damages" clauses that increase the stakes for nonperformance.
Developing software or creative assets for government use can create intellectual property conflicts. Claims of infringement or misappropriation are expensive and time-consuming, even when they stem from oversight rather than intent.
Investigations, ethics complaints, or whistleblower cases can put your business under intense scrutiny. These situations require a coordinated defense strategy and often involve specialized legal expenses.
Government contractors can reduce exposure and strengthen compliance by taking the following steps.
Protect your business from errors, omissions, and professional negligence. Most government contracts require proof of professional liability (errors and omissions, or E&O) coverage.
Identify the mandatory insurance clauses and indemnity requirements before signing any contracts. Watch for language that may trigger uninsurable obligations.
Supplement E&O coverage with related policies, including:
Implement internal review procedures and mitigation endorsements to identify potential errors early and minimize the severity of claims.
Avoid including broad "duty to defend" clauses and other vague indemnity terms, as they can increase your exposure or conflict with policy limits.
For more insights, refer to Specific Insurance Requirements for Government Contractors: Why One Size Doesn't Fit All.
Sahouri's advocates help government contractors navigate the claims process, coordinate with carriers, and minimize long-term premium impacts through proactive, consulting-based guidance.
Learn more in Navigating Emerging Insurance Challenges for Government Contractors.
Professional liability exposures are unavoidable in government contracting, but with the right strategy, you can manage them.
Contact Sahouri's team of advocates to align your insurance program with federal requirements while maintaining resilient and compliant operations.
Professional liability policies cover negligence and financial losses from your professional services but exclude intentional acts, bodily injury, property damage, or non-financial claims.
Professional liability insurance is often required for federal contracts, protecting against disputes from performance issues, errors, or advice that cause client damages. Without it, contractors risk significant financial and reputational harm from legal claims.
Yes, depending on the specific scope of work outlined in your government contracts, you may also need additional specialized insurance coverage. These could include:
Professional liability insurance is typically claims-made, requiring an active policy at both the incident and claim-filing times for coverage. Occurrence policies protect you for incidents that happen while the policy is active, no matter when you file a claim, which is helpful for those retiring or switching jobs because it covers past work without needing to keep paying premiums.