All Contractors need insurance. From the small artisan contractor to the big construction company and while the amounts of insurance can change – the coverages are pretty standard. You will find that contractors insurance policies are pretty standard and they will insure your business for what you do. Let’s look at a few types of Contractors Insurance Policy types.
Contractors Insurance – General Liability
The general liability policy has to be the most common policy for most contractors. The liability policy is not a warranty on your work, but insures the work you do does not cause other damage. One example of this would be in a claim that I saw personally; a plumber did some work on a home fixing some plumbing and somehow one of the pipes he worked on leaked causing a good amount of water damage to the home. The insurance paid for the damage on the property but did not fix the pipe.
When you have a general liability policy you may find the some general contractors you work for do request some additions to your policy. These can cost extra, so make sure you understand what these do.
- Additional Insureds – You make the entity an Additional Insured on your Contractors Insurance policy means that if you did work and you and they were sued, they would be covered under your policy.
- Primary & Non Contributory Wording – This endorsement makes your insurance primary over theirs, so if the claim was both of your faults, your company would pay first and not make their company pay.
- Waivers of Subrogation – This means that your insurance company can not have their company pay even if the loss was not your fault.
- Per Project Aggregate – Makes your insurance limits the same at each location, regardless of prior claims. So, if you had a claim somewhere else your contractors insurance limits would be fresh at the new location.
Because these endorsements create situations where the insurance company may have to pay more in insurance, you get the extra cost. Make sure it is worth it before you do add them to your commercial insurance policy.
Contractors Insurance – Workers Compensation
The next coverage that is really important is Workers Compensation. If many states, even if you only have one employee you are required to carry this insurance coverage. Workers Compensation is important for the two things it insureds you for. The first most people think about is injuries. If a workers is insured on the job the workers compensation will cover them up to the limits of your contractors insurance policy. The second part of this workers compensation policy that is very important is the employers liability coverage. This insures you for the liability part where an employee may sue you after they were injured if they said they worked in unsafe work conditions.
This policy only covers workers when on the job and does not cover claims of Sexual Harassment or Discrimination – for that your would need an Employment Practices Liability Insurance (or EPLI) policy.
Contractors Insurance – Commercial Auto Insurance
Commercial Auto Insurance is the next biggest coverage of a contractors insurance needs. Why do you need a commercial policy? You will find that many personal auto insurance policies exclude business use, so you would not want to get into an accident only to find that you have no coverage. A Commercial Auto Policy can also insure bigger vehicles.
Contractors Insurance – Other Coverages
There are a few policies out there that should also be considered for your business when thinking about your commercial insurance package and what you need to cover it.
The first would be a Commercial Umbrella; if your business is big enough and the limits of liability you buy on the policies above are not big enough, then you can buy an umbrella which will extend them.
Next would be an inland marine policy. This coverage would insure your property while on the road, this could cover them on the job site as well as in your vehicle. However this does not cover materials, for that you would need to purchase a Builders Risk policy.
A Builders Risk policy covers new or remodeling construction for property losses and this can be theft, fire, etc.
Some contractors also require commercial bonds when bidding on jobs and their are many kinds from Bid Bonds to Performance & Payment to Dishonesty Bonds and Contractors License Bonds.
Depending on the size of your business you will find that you need more contractors insurance coverage to protect your company and your future. This bigger your business is the more insurance you will need. Contact us today with any questions you may have and we can give you coverage recommendations on your business or submit below for a quote.