General contractors have a specific insurance coverage called “business insurance for contractors” or “contractors’ insurance.” This type of insurance policy can protect both the business property and its workers/employees from several financial losses.
In this article, you will find out why this type of insurance policy is important for general contractors.
What is Business Insurance for Contractors?
This is a type of insurance policy solely for contractors. With this, you can have peace of mind knowing that the financial losses coming from loss of business equipment or a legal action against your business would be settled by the insurance company.
Who Needs Contractors’ Insurance?
Do you need this type of insurance? We think you do if your line of business falls into any of the following categories:
- HVAC specialists
- Drywall contractors
- Construction workers/firms
Basically, the contractor’s insurance is ideal for businesses that are in the niche of offering hand-based services, ranging from fixing appliances to woodwork and welding.
How Contractor Insurance Protects Your Business: The Major Types of Coverage
One of the factors to consider when shopping around for business insurance for contractors is the extent of the coverage. This is encapsulated in the type of insurance policy you opted for.
Thus, here are some of the common types of coverage to get for your contracting firm:
1. General Liability Insurance
This type of coverage covers most of the liabilities (read as financial losses and expenses) that your contracting firm may be exposed to.
With the general liability insurance, your company is protected from financial expenses incurred from lawsuits filed by third-parties who got injured on your property. In addition to that, the coverage provides for damages caused to other people’s property by your business equipment.
There is also a need to get this type of coverage to protect your business from what is termed “completed operations liability.” This type of liability of financial expense is triggered when your client notices a damage or malfunctioning in an appliance or installation made by your business.
Note: A general liability insurance is only limited to third-party bodily injuries and property damages. Thus, if your employee gets hurt in the course of working, the coverage doesn’t provide anything for them. Rather, the Workers Compensation Coverage is the ideal insurance cover they need to file a claim, if need be.
2. Commercial Property Insurance
This type of business insurance for contractors covers damages caused to the company’s properties. This type of policy extends to both the properties owned by the company and that leased to the company.
Note that this type of business insurance policy can vary by insurers, because they may have different types of damages covered by the policy.
3. Professional Liability Insurance
This is one of the popular business insurance policies for contractors. With this, your business or contracting firm will be able to foot the expenses of making a reimbursement or redoing the job.
Generally, the terms of a professional liability insurance state that a client of a contracting firm can file a lawsuit or make a claim over an unfinished project. The client is also disposed to make a claim if he or she is not satisfied with the quality of the work done by your contracting firm.
In this case, the insurer will foot the bills for either redoing the job to the client’s taste or refunding the client the money paid to your company.
Peradventure your business is halted due to office renovations or relocation, the finances wouldn’t be in a bad shape. The Business Interruption Insurance Policy is there to cover the basic financial ends of your business during its temporal closure.
Depending on the insurance company, the reasons for making a claim for this coverage can range from expenses made due to damaged equipment and theft of business-related property.
5. Workers’ Compensation Coverage
This type of business insurance for contractors provides for the financial protection of your employees. The policy provides an option for the employees to make a claim if they had bodily injury while working for your company.
A workers’ compensation insurance policy also covers the medical expenses if your employees get sick and their ailment is within the terms of the policy.
Alternative Business Insurance Policies for Contractors
The above are the most-popular and most-bought types of business insurance for contractors. However, there are several others that can protect both your business property and the equipment.
Tools & Equipment Coverage
This type of business insurance policy for contractors was formerly known as “inland marine insurance.” It provides coverage for business-related equipment during the transportation from one place to another. The policy also provides for the financial reimbursement for theft of business-related equipment.
Commercial Auto Insurance
Your company-owned vehicles need to be protected too. Whether they get into an accident or someone stole the vehicles, with the commercial auto insurance, you are safe.
The commercial auto insurance only covers vehicles or cars used for business-related movements. This includes vehicles used for transporting business equipment, conveying employees to work and conducting business-related activities in the car.
*The vehicle may also be covered if it were involved in an accident while being driven by an employee of your construction firm.
*Auto insurance companies may have different views and terms for vehicles involved in an accident while manned by an employee.
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Builder’s Risk Insurance Coverage
Working as a contractor or providing contracting services comes with lots of risks. For example, a property belonging to your client may get damaged while your employees are working on the premise.
If you don’t have an insurance policy, your business may get a lawsuit requiring it to pay for the damages. This can dip a lot of holes in your company’s account.
What to do? Get a Builder’s Risk Insurance policy! This type of policy covers your business from making expenses towards the damage or loss of client’s property during the phase of working on the property.
Business Insurance for Contractors-Conclusion
As a contractor, you need all the legal and financial backing you can get to keep your business safe from making untoward expenses.
Having business insurance for contractors is a great way to start. It protects not only the business but also its employees and equipment.