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What You Need to Know About Contractors Insurance

Building house on blueprints. Visualization of house construction. 3D illustration

Whether you are a contractor or you’re hiring a contractor, no job should begin before contractors insurance is in place.

If the unexpected happens and someone gets injured or property is damaged, who pays? Keep reading to learn more about what you need to know about contractors insurance today.

Why Do Contractors Need Insurance?

No matter how great of a contractor you are, accidents can still happen. Working as a contractor involves managing many moving parts; there will always be factors beyond your control. And if an accident does happen, damages can add up quickly.

You don’t want to be stuck footing that bill out of your own pocket. This is where insurance comes in. When you have a contractors insurance policy, you don’t have to worry about whether you will go out of business if you make a mistake or something goes horribly wrong.

Contractors insurance also covers much more than you might think. To name one example, theft or damage of building materials, either in transit or at the job site.

If you don’t have insurance, you could end up be held personally liable and ultimately, your business could end up going bankrupt. Insurance policies for contractors offer protection for you and your business. Having insurance will make you appear more trustworthy in the eyes of potential customers, because they don’t have to take on a risk by hiring you.

Depending on where you live and what trade you work in, your state may require you to carry insurance. Contractors insurance is highly customizable, so you can find a policy that works with your business needs as well as your budget.

General Liability Insurance

Every party involved in a construction project, including sub-contractors, should have general liability insurance. This type of insurance covers you if you accidentally cause bodily injury or property damage to another party. If this happens and you don’t have insurance, you can be sued and your business/personal assets could end up at stake.

General liability insurance covers a number of different trades and contractor needs. But it does have clear and defined limits. If your business operations fall outside of those limits, you will additionally need more specialized coverage.

Insurance for Specific Trades

If you are a contractor who works in a specific trade, you might want to purchase a policy that covers the specific risks associated with your trade. Different trades have unique risks that might not be covered by a general policy. There are thousands of different general liability class codes, and it is important to recognize what is being covered under your policy.

Examples of trade-specific insurance include:

  • Window Installers
  • Siding Installers
  • Painting
  • Heating & Cooling
  • Plumbing
  • Electrical
  • Carpentry

These specific coverages can be added to your general liability insurance policy to provide extra security and protection.

Business Owners Insurance

If you own a contracting company you need coverage not just for yourself, but also for your business and your employees as well.

If this is the case, you might benefit from purchasing a business owners policy. This type of policy not only provides general liability coverage, but also provides protection for your business property such as tools and equipment.

Different insurance carriers offer different coverages under their business owners policies. Make a list of the needs specific to your business, then compare it against your policy options to make sure you get the coverages you need.

Builder’s Risk Insurance

Builder’s risk insurance is a type of property insurance. This insurance covers construction contractors, and is a short-term insurance option designed to cover the duration of a building project. This type of policy can be carried by either the owner of the property or the contractor themselves.

This type of insurance focuses on covering property damage, including damage to your tools, scaffolding, and other work materials. Local building codes often require contractors to carry this type of insurance when completing a job.

Business Auto Insurance

Contractors generally use a number of different vehicles to transport people, materials, and to do specific work. The use of vehicles introduces the potential for property damage and bodily injury as a result of auto accidents.

Contractors invest a lot of money into their vehicles. Business Auto insurance protects contractors and other parties in the event of a vehicle accident. Hired/Borrowed Auto and Non-Owned auto coverages are two common extensions of coverage often needed.

If you work in a trade that uses unique vehicles, you want to make sure your policy covers the right types of vehicles and their specific use cases.

Workers Compensation Insurance

General contractors are usually required by law to carry workers compensation insurance. This type of insurance offers protection for employees that are injured on the job.

It’s so important because construction is an injury-prone industry. If an accident occurs, your workers compensation policy will cover medical expenses and disability payments if the injured worker is unable to return to work or permanently disabled.

If you are a sole proprietor or a single member LLC, most states will allow you to opt out of workers compensation coverage.

Completed Operations Insurance

You might be wondering whether insurance covers you after your job is completed. If you have completed operations insurance (which is normally included in your general liability) the answer is yes.

Even if you do a great job, things can go wrong down the line with the work you completed and you could be held liable if your work causes injuries or property damage. If you have completed operations insurance, you and your clients will have peace of mind that you are both covered if something happens after the job is done.

Are You Looking to Purchase Contractors Insurance?

If you are a contractor, you need to be sure you are covered in the event that something goes wrong.

You can protect yourself and others by purchasing a contractors insurance policy. As your business grows, you want to make sure that your current policy covers the changes your business goes through.

Having a good insurance policy will give you and your clients peace of mind. Contact us today to learn more about how contractors insurance can protect you and your business.