Contractors are essential to our world, providing expert craftsmanship to many things. As a business owner and contractor, you run your business as if your life depends on it because it does at least financially. When something happens that can affect your business and livelihood, you want to know that you have support. Insurance is critical for these moments, showing up when a claim happens and you are held liable for damages to a third party. Additionally, it can help pay for the legal costs associated with any claims alleging bodily injury and property damage to a third party. These costs can add up quickly, so insurance for contractors is worth it for this benefit alone.
General Liability insurance for contractors is an essential part of your insurance program. It is usually the first policy that any business purchases, but contractors often buy it when a contract requires it. Usually, if you are subcontracting for a General Contractor, they will require you to have General Liability insurance. While this is a great reason to have it, you really should have it the moment you go into business. Because of the vast array of things that can happen to cause you financial harm, not having General Liability insurance can be devastating to your business, and ultimately your life.
If you live in New York state, you know that there are more people in the state than others. Because of the higher population, the risk of you having a claim as a business owner is higher than others. Not only that, but New York requires almost all business owners to carry General Liability, so you can't wait for the General Contractor to require you to have it, you have to have it now to avoid being penalized by the state.
There is a vast amount of insurance companies that do business in New York, so between that and the fact that each business is different, the cost of insurance will vary widely. Also, your insurance premiums will depend on the policy and each one will have a different rating basis. For example, General Liability insurance may be rated on the number of employees or your annual receipts. Commercial Property will be based on square footage. Workers Compensation on payroll and classification of jobs. Certainly, all of the policies will consider your claims history if there is any, and your work experience. Be sure to get quotes from many companies so you can compare prices and coverages.
As you may have gathered, New York can be a whole different animal when it comes to insurance for contractors. There was a study done in 2017 called the International Construction Market Survey by Turner & Townsend. It showed that New York had the most expensive construction market in the entire world. Maybe not so good for customers, but it proves that you can make a lot of money. Keeping in mind that you have the right insurance protection so that you don't lose all of that money made by a mistake or unforeseen event.
The type of insurance you will be required to have in New York will vary by the county you operate in. Contractors are required to be bonded if you work on public projects, like government-type jobs. Some counties will even require you to be bonded before you can get licensed. Contractors are also required to carry Workers Compensation insurance. This is something you should carry anyway as it is essential coverage for your employees, regardless of what state you live in. Most states require it, and New York is one of them.
Some jobs that you do will also require you to have Professional Liability insurance. If you do any consulting or are providing any plans or advice, this is a great insurance policy to have. If you are negligent or make an error or omission that results in financial hardship to the customer, you could be held liable for the damages.
While the above insurance policies are a good place to start with protecting your business, they are not the only ones you may need. To make sure your business continues to turn a profit, you must have a comprehensive insurance program that covers all the bases and hopefully leaves you with no gaps in coverage.
BOP – A Businessowners policy, or BOP, is a great way to package together with your General Liability and Commercial Property coverage. It is designed for small to medium-sized businesses and allows for a little bit of savings since the two major coverages are combined on one policy. You will be able to cover a building you do business out of if you have one, your business personal property coverage, and your liability. You will even have the option to add additional insured's as needed based on any contracts you sign for jobs.
Commercial Auto – The moment you start using a vehicle to do business, even if it is just driving to and from the job sites, you have to insure them on a Commercial Auto insurance policy. A Personal Auto insurance policy will exclude any claims that involve vehicles being used for business. Be sure to get your vehicles insured properly, because you don't want to end up having to pay for a claim out of pocket, especially if it is a severe accident. Also, if any of your employees are using their own vehicles be sure to add Hired and Non-Owned liability. Unfortunately, if your employee is at fault in an accident while working for you, you could be held liable. Please remember, this does not pay for their auto, just for your liability.
Inland Marine – Chances are, you have a ton of equipment that you own to use for your business, as well as temporary pieces you may rent or lease. The equipment will be insured on an Inland Marine policy or Equipment Floater. Sometimes this can be added to a Commercial Property, BOP, or Commercial Package policy, but other times it may be a separate policy. It will depend on your circumstances and an experienced insurance agent can help to determine what is right for you.
Builders' Risk – As a contractor, you may be in the business of renovating a property. Commercial Property insurance only covers a structure that is not being renovated. Once the renovations start, that can open up a huge gap in coverage unless you have Builders' Risk insurance. This coverage will pay for damages to the property that is being renovated while construction is in progress. You also have the option to cover building materials that have not been installed yet, even for theft which is an unfortunately common occurrence in your industry.
CoverWallet has a team of advisors standing by to work through all of this overwhelming information with you. As a contractor in a very populated state like New York, it is imperative to your business and peace of mind that you have an excellent insurance package in place.