Businesses of all sizes and industries today are exposed to a variety of risks and liabilities. These include workplace injuries and property damage, among other incidents. Therefore, it is important to acquire proper protection in order to avoid paying large sums of money to resolve claims. However, business owners and full-time employees are not the only types of workers who should purchase insurance. Contractors, who perform work and are paid on a project basis, can also benefit from acquiring insurance coverage. Contractor insurance isn’t one-size-fits-all. A specialized policy allows you to easily customize and simplify your insurance coverage to ensure that your business’ unique needs are protected
Contractors insurance is designed to protect your business from severe financial burdens that may arise from work-related accidents. If you are a contractor, subcontractor or independent tradesman, you may benefit substantially from this type of coverage. Some employers may even require you to purchase it before you begin working for them. Examples of trades that typically require contractors insurance include electricians, plumbers, landscapers, and construction workers.
If you are a contractor, chances are you’ve had some experience with construction insurance, whether it be bonding, workers compensation, or general liability. Sometimes a policy is required by companies you are subcontracting for, and frequently it is required by licensing and construction boards. In construction, no two contractors have the same insurance policy- your business is unique and so is your coverage. It’s essential that you know the basics of what you have and what you might need in the future to ensure you have the broadest protection. Contractors, subcontractors and independent tradesman should carry contractor insurance. It not only protects your business, but it’s often a requirement by many employers before you can start working for them
Contractors insurance usually covers business liability exposures, such as injuries or damage to a client’s property for which your business is responsible. This is covered by general liability insurance, an essential part of a contractors insurance policy. Contractors insurance can also extend to cover your business’s vehicles and employees, depending on the coverages selected.
Independent contractors have the same legal obligations and liability exposures as larger firms. They can be sued for damaging client property, causing bodily harm, or advertising industry.
There are many types of independent contractors who all need independent contractor’s liability insurance and other coverage to match their specific risks. Some of the professionals that need contractors insurance include:
- Independent construction contractors
- Plumbers, carpenters, electricians and painters
- Repair people
- House and carpet cleaners
- Freelance writers, editors and graphic designers
- Independent hair stylists, and salon professionals
- Horse or dog trainers
A specialty contractor insurance policy is an easy way to cover multiple risks without having to settle for a one-size-fits-all policy that wastes money on coverage you don’t want or need.
A good policy includes general liability that covers you against claims of damage or injury caused on site or to visitors on your own premises. Such costs can be immense and general liability insurance is often mandatory if you want to bid for government contracts.
Contractor insurance policy generally excludes willful negligence, total or partial cessation of work, faulty design and consequential losses. Damage to the contract work due to war, radiation contamination and act of terrorism are also commonly excluded under the policy.
If you want to protect your stock, machinery and equipment against damage or loss from fire, theft, flooding and other risks, both on-site and off-site. Just as importantly, you need to have insurance coverage against loss of income if you are unable to carry out work because your equipment is damaged. Remember you will also need workers’ compensation insurance, if you have employees, which is usually mandatory and protects employees against lost income and medical bills resulting from workplace injuries.
“Required By Contract”—meaning most contractors purchase these additional insurance policies because they are mandatory for certain (typically big) projects. Larger general contractors or project owners want to ensure their extensive assets are covered, so they will only hire contractors with the insurance that protects them.
Small contractors are often trade contractors with fewer than 10 employees. These contractors often take jobs as subcontractors and specialize in a specific type of project. The first insurance policy a small contractor should get is a business owners policy (BOP). This is a low-cost insurance policy with a lot of coverage included.
For example, in addition to the general liability and property coverage, a contractor’s BOP typically comes with additional coverage for your hand tools and property when in transit.
Medium Sized Contractors Although there is no definitive size requirement to be a medium-sized contractor, this generally applies to contractors with 50 to 200 employees. These contractors work on larger jobs that often require specific insurance policies.
Ask upfront how flexible the insurance company is when complying with the insurance requirements of your general contractor or project owner. For example, will the insurance carrier accommodate different additional insured endorsements? Does the broker have other, similarly-sized clients with the same insurance carrier?
Even if a carrier is marginally more expensive, it might make sense to spend a little more if they offer a greater ability to help you meet job requirements. We suggest giving the carrier contracts that you have bid in the past to see if they can accommodate the endorsement requirements.
Medium-sized contractors should also start looking at additional coverage’s, such as employment practices, cyber, pollution, contractors E&O, and inland marine.
Large contractors require the most specialized insurance programs. Owners of large construction firms purchase the same coverage as medium-sized contractors, plus require specific policies such as wrap-ups and OCIPs.
The exact amount will depend on:
- The type of projects you work on
- Where are your projects located
- Your payroll and the kind of jobs your employees do
- The number and types of vehicles you use at work
Each general contractor is different, and as a result, each general contractor’s insurance cost will be different. Given the variety of types of jobs you take on, that probably won’t come as a surprise. The cost of general contractor liability insurance for your business will be based on a variety of factors, including the types of work you do, how many employees you have, and where you work.
Costs can be quite different between businesses. Your general contractor insurance rates will differ than those of a friend or neighbor, whose business might be quite different. Even so, here are a few general contractor liability insurance costs that are constant for our customers. First of all, you’ll never have a huge payment, since we allow you to pay for your general contractor insurance monthly, rather than annually. You also won’t need to worry about a huge deductible, since all general liability policies for general contractors have a $0 deductible. There’s no fee for the certificates of insurance you might be asked to present, even if you need to add an additional insured. Most importantly, you can choose your level of coverage based on your needs.
Depending on your resources, you may not have a choice between becoming a handyman or a general contractor. General contractors often have experience in construction or even specialized training. In some states, they may have to pass exams or undergo extensive background checks. Big projects also need more resources over the long term, including equipment and broad general contractor insurance coverage. Meanwhile, handymen can do a short course or even get started working right away. Although handyman insurance is still important, they often need a simpler policy since it doesn’t need to cover as high a number of subcontractors or specialized tasks. Because the stakes are much lower, customers often require fewer references and credentials for a handyman than a general contractor. This means that it can be easier to find handyman jobs, even if they are less lucrative than contractor jobs.
Contractors insurance is coverage that can protect your business from devastating financial debts that can result from work-related accidents. It’s important to protect your livelihood with adequate coverage and limits that match your exposure in case your business is threatened.
Protect against things like lawsuits and other liabilities with contractors insurance through CompareAquote.com.
While some companies offer a “one-size-fits-all” contractors insurance policy, we know every contracting business is unique. That’s why CompareAquote.com experts will work with you to customize a policy just for your business, so you only pay for coverage you need.
Owning a contracting business carries inherent risks. There are many possibilities for people to suffer injuries or properties to sustain damage. Whatever physical injury or property damage takes place on the job site, you can be sure it’s the contractor who will be on the receiving end of a claim—and may be forced to pay for it out of pocket.
However, contractors don’t need to risk losing money or closing shop because of a claim. As long as they have proper insurance coverage, they should be able to settle claims and continue business as usual.
Don’t wait until an accident happens—and stop wondering what types of insurance should a contractor have. Always talk to compareAquote.com insurance professional with experience insuring contracting businesses to make sure you’re adequately covered and that you’re compliant with your state’s insurance requirements for contractors.