As a contractor, you’re responsible for completing projects on time and within budget. However, no matter how careful you are, accidents can and do happen. That’s why it’s essential to have adequate insurance coverage to protect your business and ensure that you’re not held financially responsible for any damages or injuries that may occur on the job. In this article, we’ll explore contractor’s insurance and why it’s so important for your business.
What is Contractor’s Insurance?
Contractor’s insurance is a type of insurance policy that is designed to protect contractors from the various risks they face on the job. Depending on the type of policy you choose, contractor’s insurance can provide coverage for:
Policy Type |
Coverage Provided |
|---|---|
General Liability |
Covers bodily injury, property damage, and advertising injury. |
Workers’ Compensation |
Covers medical expenses and lost wages for employees who are injured on the job. |
Professional Liability |
Covers errors and omissions made by contractors in the course of their work. |
Commercial Auto |
Covers damage to vehicles used for business purposes. |
By having the right contractor’s insurance policy, you can protect your business from potential financial disasters and give yourself peace of mind.
General Liability Insurance
General liability insurance is one of the most important types of insurance for contractors. It provides coverage for bodily injury, property damage, and advertising injury that may occur during the course of your work. This type of insurance can cover the costs associated with lawsuits or settlements, including legal fees and damages.
If you’re a contractor who works on job sites, it’s important to have general liability insurance. Even if you’re careful and take all necessary precautions, accidents can happen. For example, if one of your employees accidentally damages a client’s property, you could be held liable for the damages. General liability insurance can help protect your business from financial losses in these types of situations.
What Does General Liability Insurance Cover?
General liability insurance typically covers the following:
- Bodily injury: This can include injuries to a client or the public that occur as a result of your work. For example, if a client trips over a piece of equipment on your job site and is injured, your general liability insurance can cover the costs associated with their medical treatment.
- Property damage: This can include damage to a client’s property that occurs as a result of your work. For example, if you accidentally damage a client’s fence while working on their yard, your general liability insurance can cover the costs associated with repairing or replacing the fence.
- Advertising injury: This can include damage caused by your advertising or marketing efforts. For example, if you use a copyrighted image in your marketing materials without permission and are sued for damages, your general liability insurance can cover the costs associated with the lawsuit.
What Does General Liability Insurance Not Cover?
There are some things that general liability insurance does not cover, such as:
- Intentional acts: If you intentionally cause harm to a person or property, your general liability insurance will not provide coverage.
- Employee injuries: General liability insurance does not cover injuries that occur to your employees while on the job. For that, you’ll need workers’ compensation insurance (which we’ll discuss later in this article).
- Professional errors: General liability insurance does not cover errors or mistakes made in the course of your professional duties. For that, you’ll need professional liability insurance (which we’ll also discuss later).
Workers’ Compensation Insurance
If you have employees working for you, you’re required by law to have workers’ compensation insurance. This type of insurance provides coverage for medical expenses and lost wages for employees who are injured or become ill as a result of their job.
Workers’ compensation insurance can help protect your business from lawsuits and financial losses in the event that an employee is injured on the job. It can cover the costs associated with medical treatment, lost wages, and even rehabilitation.
What Does Workers’ Compensation Insurance Cover?
Workers’ compensation insurance typically covers the following:
- Medical expenses: This can include doctor visits, hospital stays, medication, and other medical treatments needed as a result of a work-related injury or illness.
- Lost wages: If an employee is unable to work as a result of a work-related injury or illness, workers’ compensation insurance can cover their lost wages.
- Rehabilitation: If an employee requires rehabilitation to recover from a work-related injury or illness, workers’ compensation insurance can cover the costs associated with that rehabilitation.
What Does Workers’ Compensation Insurance Not Cover?
There are some things that workers’ compensation insurance does not cover, such as:
- Intentional acts: If an employee’s injury or illness is the result of an intentional act, workers’ compensation insurance will not provide coverage.
- Injuries that occur outside of work: If an employee is injured or becomes ill outside of work, workers’ compensation insurance will not provide coverage.
Professional Liability Insurance
Professional liability insurance (also known as errors and omissions insurance) provides coverage for contractors who provide professional services. This type of insurance can provide coverage if you make a mistake or oversight that results in financial harm to your client.
For example, if you’re a contractor who provides architectural design services, and you make a mistake in your design that results in damage to your client’s property, your professional liability insurance can cover the costs associated with the damages.
What Does Professional Liability Insurance Cover?
Professional liability insurance typically covers the following:
- Negligence: This can include mistakes or oversights made in the course of your professional duties.
- Breach of contract: If you fail to deliver on a contract with a client, your professional liability insurance can cover the financial losses associated with the breach of contract.
- Errors and omissions: If you make a mistake or oversight that results in financial harm to a client, your professional liability insurance can cover the costs associated with the damages.
What Does Professional Liability Insurance Not Cover?
There are some things that professional liability insurance does not cover, such as:
- Bodily injury or property damage: If your mistake or oversight results in bodily injury or property damage, your professional liability insurance will not provide coverage. For that, you’ll need general liability insurance.
- Intentional acts: If you intentionally cause harm to a person or property, your professional liability insurance will not provide coverage.
Commercial Auto Insurance
If you use vehicles for your business, you’ll need commercial auto insurance to protect them. This type of insurance provides coverage for damage to your vehicles and can also cover liability in the event of an accident.
Commercial auto insurance can cover a range of vehicles, including cars, trucks, and vans. It can provide coverage for collision damage, theft, vandalism, and more.
What Does Commercial Auto Insurance Cover?
Commercial auto insurance typically covers the following:
- Collision damage: This can include damage to your vehicle as a result of a collision with another vehicle or object.
- Theft and vandalism: If your vehicle is stolen or vandalized, commercial auto insurance can cover the costs associated with repairing or replacing it.
- Liability: If you’re at fault in an accident and someone is injured or their property is damaged, commercial auto insurance can cover the costs associated with those damages.
What Does Commercial Auto Insurance Not Cover?
There are some things that commercial auto insurance does not cover, such as:
- Personal use: If you use your vehicle for personal use as well as business use, commercial auto insurance may not cover any accidents or damage that occurs during personal use.
- Uninsured motorists: If you’re in an accident with an uninsured motorist, commercial auto insurance may not provide coverage for the damages.
FAQ
What is the cost of contractor’s insurance?
The cost of contractor’s insurance can vary depending on a number of factors, including your location, the size of your business, the type of work you do, and the amount of coverage you need. Generally, though, the cost of contractor’s insurance can range from a few hundred to a few thousand dollars per year.
Do I need contractor’s insurance if I’m a sole proprietor?
Even if you’re a sole proprietor, it’s still a good idea to have contractor’s insurance. Accidents can happen no matter how small your business is, and having insurance coverage can help protect your personal assets in the event of a lawsuit or other financial disaster.
What happens if I don’t have contractor’s insurance?
If you don’t have adequate insurance coverage as a contractor, you could be held personally responsible for any damages or injuries that occur. This could result in financial ruin and even bankruptcy. It’s essential to have the right insurance coverage to protect your business and give yourself peace of mind.
What should I look for in a contractor’s insurance policy?
When choosing a contractor’s insurance policy, look for coverage that is tailored to your specific needs. Make sure the policy provides adequate coverage for the types of work you do and the risks you face. It’s also important to choose a reputable and financially stable insurance provider.
Can I bundle my contractor’s insurance policies?
Yes, many insurance providers offer bundle packages that combine different types of insurance coverage for contractors. This can often result in cost savings and make it easier to manage your insurance policies.
What should I do if I need to make a claim on my contractor’s insurance?
If you need to make a claim on your contractor’s insurance, contact your insurance provider as soon as possible. They will guide you through the claims process and help you get the coverage you need to protect your business.
As a contractor, you face a variety of risks on the job. That’s why it’s essential to have the right insurance coverage to protect your business and give yourself peace of mind. Whether you’re looking for general liability, workers’ compensation, professional liability, or commercial auto insurance, there are policies available that can meet your needs. By choosing the right insurance coverage, you can protect your business and focus on completing projects on time and within budget.