Independent contractors, subcontractors, and general contractors all need insurance to protect their businesses — but the types of insurance you may need can vary depending on how your contractor business is structured, what type of work you do, and what type of equipment you use (including vehicles).
Because many contractors are sole proprietorships, certain types of liability insurances become especially important because it isn’t just your business assets at risk. A sole proprietor not incorporated as a business may find their personal assets at risk as well. An accidental injury, or damage to someone else’s property, can lead to personal liability.
Many times, insurance is required by commercial landlords or is a requirement for a job contract. In both of these cases, it’s usually a Commercial General Liability policy (CGL) that’s required and you’ll need a Certificate of Insurance to prove you have coverage. This coverage is also available as part of a Business Owners Policy, which bundles both commercial liability coverage and business property coverage. Commercial liability coverage protects your business against bodily injury liability and property damage liability. Personal and advertising injury coverage is included as well. The business property coverage in a Business Owners Policy protects any buildings you may own for the business as well as your equipmentor business personal property.
In some cases, a contract may also require that you carry Workers’ Compensation coverage. To qualify for the job, and avoid breach of contract, you’ll need to purchase coverage even if Workers’ Comp coverage isn’t required by law in your state. If you have employees or regular workers, it’s likely that you’ll be required by your state to carry Workers’ Comp coverage.
Commercial Auto Insurance is required for work vans, trucks, or even passenger cars that are primarily used for business. Personal auto insurance doesn’t cover commercial use or business-related use of your vehicle, possibly creating personal liability for auto accidents.
Many of these coverages (and more) can be bundled together in a Commercial Package Policy. A package policy is a group of coverages specifically chosen for your business. By combining policies with one insurer, there are often considerable savings available compared to buying each policy separately.
CGL insurance is at the heart of any business insurance coverage strategy. Your business liability coverage protects your business against the following types of liability:
CGL coverage typically begins with limits of $1 million per occurrence and $2 million aggregate. These coverage amounts are common requirements for small business leases and for many types of work contracts. You also have the option to purchase higher limits. Doubling your coverage limits usually won’t double your premiums, however. Insurance tends to become more affordable per dollar of coverage as you increase limits. Higher limits provide more protection for your business and personal assets.
You’ll need insurance for your work trucks, vans, or other vehicles used for your contractor business — but you also need the right type of insurance. A Commercial Auto Insurance policy provides coverage specifically for vehicles used for your business. Your personal auto policy doesn’t cover most business-related activities, possibly leaving you vulnerable to a lawsuit if you are involved in an auto accident. Commercial vehicle accidents involving injuries can be particularly expensive. Medical coverage for yourself and your passengers is usually included with your policy. Medical coverage options vary by state. Much like your personal auto policy, your Commercial Auto Insurance provides an option to cover damage to your work vehicles as well.
If you have employees or subcontractors, you’ll likely need to purchase Workers’ Comp coverage to be compliant with state requirements. If you’re a subcontractor, you may be required to carry Workers’ Comp coverage by the contractor or it may be a requirement of the contract to meet the client’s needs.
Professional Liability Insurance is another commonly chosen policy which provides coverage for losses due to errors made by you or your employees, as well as by subcontractors or third-party specialists you may hire, such as engineers.
Surety Bonds may be required for certain projects, such as public sector projects or for larger private sector projects. A surety bond ensures the project’s completion and adherence to the contract terms.
Health insurance, employment liability insurance, business property insurance, and inland marine insurance, which protects property in transit by truck or van, are all other common coverages chosen by contractors. CoverWallet gives you the freedom to bundle the insurance coverages you need into one convenient Commercial Package Policy that makes your coverage easy to manage and saves money by bundling with one insurer.
Whether you’re an independent contractor or have a larger team, getting covered is easy. Just reach out to CoverWallet’s team of trusted insurance agents for a fast, no-obligation quote.