In the construction industry, even well-planned projects have uncertainties and risks. Job site injuries, stolen materials, damaged equipment, faulty workmanship, and design errors can lead to unbudgeted costs and expenses, which you don’t want.
If you’re a contractor, you will probably have some experience with construction insurance, whether it is bonding, general business liability, or workers’ compensation. The various tasks and activities required to meet the strict deadlines of your projects may expose your business and your workers to unique risks and perils. As you and your workers use potentially dangerous equipment, your work can cause injury to third -parties and even damage property.
What is General Contractor Insurance?
General contractor insurance is a type of business insurance that protects your business, employees, and assets in case the unexpected occurs, causing significant liability or loss. Sometimes this policy is required by companies that you subcontract for, and often it’s required by construction and licensing boards in the country. You could benefit from general liability and workers comp benefits, whether you are a large construction contractor with hundreds of employees, a one-person cleaning company or a snow plowing firm. They will help in a case of a legal claim, theft or accident no matter what type or hazard it is.
Importance of Insurance for General Contractors
Contractor insurance protects you financially and legally from amounts you may become obligated to pay because of medical payments or property damage, bodily injury, or personal and advertising injury to third parties that occur during the insurance policy period, either caused by or relating to your work. As an independent contractor, ‌you should maintain this quality coverage for your protection, and because you are usually required to provide evidence of this coverage to get accepted for a construction project.
Know Your Needs
In construction work, every contractor has a different coverage needs — keep in mind that your business is unique, and so has to be your insurance coverage. You must know and understand the basics of what you have and what you may need down the line to ensure you have the broadest protection if you run a contracting business. Buying the right insurance policy from a reliable company is essential to lower your risks.
Why You Need General Contractor Insurance
Business insurance for contractors and companies in the contracting business helps cover expenses related to property damage, worksite injuries, and other risks that you face every day.
Claims Protection
If you are a sole contractor, you are fully responsible for your work area. And if someone sustains an injury within that area because of an accident or simple negligence on your part, that person will probably file a legal claim against you.
The same responsibility would apply to all your employees if they were to cause accidental or intentional damage to the property. These legal claims could be big enough to shut down your business if you are forced to pay for these damages out of pocket. So, to avoid these disastrous consequences, you should consider buying general liability insurance for contractors from a reputable insurance company that will take your needs and preferences into account.
Client Requirements
Some clients need you to carry general liability coverage before signing an agreement with you. If you don’t have an insurance policy, your customer risks being held responsible for any accidents or alleged mishaps that you cause.
Peace of Mind
​Knowing your contracting business is protected from accidents or unexpected occurrences gives peace of mind to you and your customers.
Payment of Legal Fees and Other Costs
You should know that uninsured contractors and construction companies usually get hit hard by court expenses, attorney’s fees, and other legal expenses when somebody files a claim against them. If your customer or other third party sues you in court, your contractors’ general insurance policy will help cover the legal costs that a suit might entail.
Types of Insurance Contractors Need
General contractor insurance or general liability coverage offers protection for the types of services your business provides:
General Liability Insurance
Many US states and municipalities legally obligate contractors to carry general liability, and each state enforces different standards regarding statutes of repose and indemnity. It’s essential coverage for your business as it protects it from accident or injury claims, false or misleading advertisement, and property damage and pays related expenses and costs.
Even if you are a subcontractor who works under an insured general contractor, it is better to carry your own general liability as it will help ensure that you do not end up with a large and unexpected bill if things don’t go as planned.
Business Owner’s Policy
BOP insurance is a comprehensive package combining essential insurance coverage for most businesses. A business owner’s policy usually bundles three crucial types of insurance — commercial property insurance, general liability insurance, and business interruption insurance — into a single policy.
Builders’ Risk
Builder’s risk insurance helps protect property and construction materials during a renovation or construction project. Also known as Course of Construction Insurance, it can help contractors with the costs of replacing or repairing lost or damaged materials on job sites. You will be happy to know that this insurance may also cover equipment and fixtures and losses incurred from perils, such as vandalism, theft, and natural disasters.
Workers’ Compensation Insurance
Workers’ compensation insurance is required in many states because it’s crucial as it covers your contracting firm from various medical costs and lost wages if a worker is injured or becomes sick while working. Considering the high-risk sites and environments that most construction businesses work in frequently, the likelihood of workers sustaining injuries on worksites is simply too high to ignore. This coverage is designed to help protect your business from the expenses of an injury at work. Most insurance companies offer this policy to reduce contractors’ liability, and independent contractors benefit from it.
High-risk contracting jobs, such as roof replacement, can lead to a higher than average number of accidents. One misstep while working on a roof or other job site can cause a worker to sustain a grave injury or die. Keep in mind that injured employees are entitled to file a claim against your company if they were injured while working on your site. And if you do not have workers’ compensation insurance, you could get in trouble.
What General Liability Insurance Covers
In most cases, general liability insurance for commercial contractors covers the following risks:
Third-party Bodily Injury
A customer may trip and fall at a job site where you are doing construction work. If that happens, you could be held legally liable for their injuries. If the individual sues you, your general liability coverage can help protect against associated medical, legal, and settlement costs.
Personal and Advertising Injury
If an employee or manager who works for your business makes false or misleading statements about another general contracting company and that company sues you for slander, a general liability insurance policy will help cover legal costs and settlement expenses. Also, you will be happy to know that your insurance policy can cover personal injury legal claims associated with libel, slander, and copyright infringement.
Property Damage
If you are renovating or remodeling a client’s house and inadvertently damage some of their expensive furniture, such as an antique chair, you may be held liable for that damage. In that case, your general liability insurance will cover the cost of repairing or replacing the furniture and any legal fees if your client sues you.
Tips for Buying General Contractor Insurance
The cost of general contractor insurance can vary considerably; so, before making a decision, consider the following to minimize contractors’ insurance costs:
Identify Various Risks
It is vital to identify your business risks. So, analyze your services thoroughly and identify potential hazards. An insurance audit can be handy if you are an independent contractor. After that, choose all the insurance policies you need.
Quote Comparison
Compare quotes as policy costs vary significantly between insurance companies. Consider several quotes to find the best rates and insurance coverage for your needs. An independent insurance agent saves you time and money in this process.
Hire an Independent Agent
Working with an independent insurance agent is freeing. Brokers can help you navigate the complexities and nuances of general contractor insurance by carefully assessing your needs and directing you to the best insurance options. There are great 24/7 available options like ContractorsLiability.com. They offer insurance quotes by agents who care about your business and will get you the best coverage and price.
Final Thoughts
As a general or independent contractor, purchasing Contractors Insurance from an experienced broker can provide crucial protection against injury claims, damage to buildings under construction, and stolen personal property. A licensed insurance agent can help you find the right policy that your business may need, and by understanding the different costs of general contractor insurance, you can feel secure and confident that you are paying for the best possible coverage from all potential risks.
