ACCOUNT ACCESS
Contractors of all kinds need to carry some type of contractors insurance—either to comply with certain legal requirements or because they are required to by their customers. Examples of general contractors, contractors and subcontractors that typically need some type of contractors business insurance include:
- Construction contractors,
- Carpenters,
- Plumbers,
- Professional cleaners,
- Electricians,
- Landscapers,
- Painters,
- Handymen,
- Snow plow operators,
- And more.
Contractors need a variety of insurance policies, from general liability to contractors bonds and several others. Needs vary depending upon the type of business they do and the risks they face, but it is essential that contractors protect their business and their livelihood from property losses, lawsuits and so much more.
If you are a contractor, consider the following types of business insurance as a starting point.
- Commercial general liability (CGL) insurance protects you against claims that you have caused damage to other people (bodily injury liability) or to other people’s property (property damage liability). It provides coverage for the cost of your legal defense and any settlements or judgments that you must pay if you are sued. It may also include coverage for liability issues related to completed operations, advertising liability and contract liability. Your liability coverage needs depend on the type of business that you do, and other types of specialty liability policies may be necessary in addition to general liability coverage.
- Commercial property insurance protects you when your business property, such as equipment, inventory, office furniture and other types of tangible business property are damaged by someone else or by some type of unforeseen event (fire, vandalism, theft, smoke, etc.). Commercial property policies also usually include business interruption coverage, which protects your earnings if your business is unable to operate because of damage caused by some type of covered peril.
- A business owners policy, or BOP, is a comprehensive insurance package that combines coverage for major property and liability insurance into one policy designed for small-to-medium sized businesses.
- Commercial auto insurance protects your company’s vehicles and drivers. It covers your business cars, SUVs, vans and trucks in the event that they are damaged in a collision or some other event. It also provides protection for vehicles that you rent, or for personal vehicles (e.g., your personal vehicles, your employees’ personal vehicles) driven for business purposes.
- Professional liability insurance, or errors and omission insurance, covers professionals, their partners, their employees and the partnership or corporation for damages caused by providing or failing to provide professional services. As contractors have become an increasingly vital part of the design process for many construction projects, their exposures to professional liability risks have grown. In addition, many contractors now take on design/consultation responsibilities on their own, or subcontract to design firms with the ultimate responsibility for professional design still on their shoulders. What’s more, new building techniques that involve computer modeling and integrated project delivery also place an increased risk for professional liability claims on contractors. Project owners often require contractors to carry professional liability insurance or risk losing a job.
- Contractors bonds, or surety bonds, are essential for contractors to find, secure and perform work as they serve as a guarantee of performance. They are essentially an insurance policy between a contractor, the client, and the surety bond company. The surety company covers the contractor’s promise to complete the terms of the contract, and ensures contract completion if the contractor defaults on its obligations. The project owner (obligee) seeks a contractor (principal) to perform certain work under a contract. The contractor obtains a surety bond from a surety company and if the contractor defaults, the surety company must find another contractor to complete the contract or reimburse the obligee for any financial loss. The contractor is expected to repay the surety company for any claims paid out, thus indemnifying the surety company from losing money. Surety bonds in essence protect the project owner and the general public, and are often required by clients in order for a contractor to be awarded a job. Types of contractors bonds include bid bonds, performance bonds, payment bonds, license and permit bonds, and maintenance bonds. Surety bonds are required for any federal construction contract valued at $150,000 or more, and many states, municipalities and even private entities have similar requirements.
- Workers’ compensation insurance protects employees who are injured on the job. You are likely required to have workers’ compensation insurance if you have employees, however, exact requirements vary by state and usually depend upon the number of workers you have and the type of work you do. Workers’ compensation insurance protects your workers from the costs resulting from job-related illnesses, injuries and even death. It also protects employers from lawsuits related to employee injuries.
Contractors need to work closely with an independent insurance agent with the knowledge, experience and confidence to develop a comprehensive business insurance portfolio. We can help you find the best policies to suit your unique needs and budget requirements—not a one-size-fits-all approach that could fail to protect you when you need it most.
We can help you learn more about contractors insurance. Do you think you have the right coverage?