How Contractors and Insurance Connect:
As a contractor, you may work on a variety of different projects. You and your staff might even be working on more than one project at a time, increasing your risk and need for the right insurance coverage.
Protecting yourself and your business is key to a long and successful career, doing what you love.
Finding the right insurance for your business can be confusing, let us help. Read on to understand what coverage you need.
Who Needs Contractors Insurance?
There are many different types of contractors who may need insurance. Including, but not limited to:
- General Contractors
- Sub Contractors
- Carpenters
- Design and Build Firms
Still not sure what you need?
CoverWallet's Insurance Checklist , you'll find a list of insurance types needed for your specific business or industry.
What Insurance Do Contractors Need?
The exact kind of insurance you need will depend on what kind of contractor you are. Don’t worry, we’ll give you some considerations for each type, so you don’t end up with the wrong kind of coverage.
General Liability
General Liability Will Offer You Two Types of Protection:
- Property Damage: This insurance type will provide your business with coverage should you or one of your employees damage or destroy someone else’s property, including the building or property you are working on.
- Bodily Injury: This insurance type will provide your business with coverage should you or one of your employees cause injury or death to a third party person while working. It will cover all medical care for the injured party and will cover your legal fees should you be sued.
When Should You Get General Liability Insurance?
Right away. Even if you don’t own commercial property, you are still exposed to many liability risks.
For Example…
If you are working on a client’s home and something falls on your client, causing them to be seriously injured. General Liability Insurance would cover the medical expenses and possible legal fees that you will accrue as a result of that injury.
Other Things to Note…
Contract Liability will provide you with coverage should an issue with the contract arise. It is not included in every General Liability policy, so you should verify that you have this coverage with your insurer.
Business Owners Policy
Bundle Up:
Often times, contractors General Liability Insurance coverages can be packaged together to create a Business Owner’s Policy. Additional coverages you might want to consider include:
- Commercial Vehicle Insurance: Provides coverage for any vehicles used to run your business. If a vehicular accident should occur, you would be covered for any damages or medical bills.
- Commercial Property Insurance: This plan covers your company’s physical assets. Whether you work in an office or work from home, this insurance is right for everyone. Additional coverages can be added if, say, you live in an area that is particularly susceptible to flooding.
When Should You Get a Business Owner’s Policy Plan?
BOP is particularly useful for a small business who is looking for a wide variety of protections. This policy expands General Liability to cover more of the risks that business owners may face day-to-day. Bundling up with a BOP may also save your business money as it often comes with a discounted price tag.
For Example...
If your business has an office and has commercial vehicles, risks are increased. This coverage would protect your business should one of your employees get into an accident while driving one of your cars.
Other Things to Note...
Some Business Owner’s Policy plans will also include some elements of Crime Insurance and EPLI. No two policies are the same, so it’s important to understand what yours covers, exactly.
Workers Compensation
For Your Employees:
Workers Compensation will cover lost wages and medical treatment to an employee who suffered a work-related injury or illness. It will also reimburse workers for lost wages until they can go back to work. As an employer, this is ideal, as it will protect you from employee lawsuits.
When Should You Get a Workers Compensation Plan?
In some states having a Workers Compensation Plan is required, even if you don’t employ anyone. Workers Compensation Regulations are mandated on a state-by-state basis. If you are a contractor, and you employ workers, your state will most likely require you to have Workers Compensation Coverage.
It is beneficial to have even if your state does not require it, as an employee-related lawsuit could harm your reputation or shut down the business you’ve worked so hard to build.
For Example…
If one of your employees is working at a construction site on a project for your business and they fall off of a ladder. A Workers Compensation plan would cover their medical expenses and help them get back on their feet. This plan would also block the injured party from suing you.
Other Insurance Types to Consider:
- Disability Insurance: This insurance will come in handy if you experience an injury that prevents you or one of your employees from returning to work. It’s especially important if you work in a high-risk industry, such as construction.
How Much Does Insurance for Contractors Cost?
The cost of insurance will depend on a few different factors including location, history of previous claims, current and past business activities, payroll amounts, the number of years you’ve been in business and the size and type of your business.
The best way to get an accurate idea of cost is to get a quote specific to the needs of your business. The next step? Review it carefully to make sure all of your concerns are covered in full.