Contractors Insurance. What is contractors insurance?
What is contractors insurance? Overview
The smooth running of a construction business doesn’t come without its risks. From large construction projects to minor home renovations, contractor insurance protects businesses from these risks while they do their job.
Contractors insurance is an umbrella term that encompasses various business insurance coverages required from a contractor.
Overall, contractors insurance is coverage that protects businesses from financial debts that can result from serious work-related accidents.
To be adequately covered, a contractor should have general public liability, workers compensation, and other coverages that we will highlight in this article.
Our article will examine the following topics:
- What is contractors insurance?
- Who needs contractors insurance?
What does contractor insurance cover?
General liability insurance for contractors.
Builder’s risk insurance.
Inland marine insurance.
Commercial auto insurance.
Commercial property insurance.
Workers’ compensation insurance.
Professional liability insurance.
Surety bond.
What kind of insurance does a contractor need?
Business owner's policy.
General liability insurance.
Business income insurance.
Commercial property insurance.
Are contractors required to have insurance?
Contractors insurance exclusions.
Key takeaways.
Contractors insurance cost.
Contractors insurance quote.
Contractors insurance USA.
Contractors insurance UK.
Contractors insurance Cyprus.
What is contractors insurance?
Contractors insurance is a necessary coverage type for many types of business owners. This insurance can help to protect your business if an unexpected issue occurs.
Contractor insurance protects your business in case of injuries you sustain while working, damage to your equipment, lawsuits, and more.
As a business entity, you may be required, either by law or by a company that hires you, to have contractor insurance coverage.
Included in this coverage is protection for your business’ assets and, if you have any, to cover your employees.
Different risks come with different plans, and most contractors need several business insurance policies, but it’s possible to buy them together from the same insurance company.
Contractor coverage eases some of the uncertainties of running your business.
You will have peace of mind having the right insurance coverage in the event your business faces a lawsuit or needs to cover a loss.
The right coverage ensures protection for your business and your employees, so it’s essential to understand the different types of contractor insurance.
First, you may need to find out if your business requires contractors insurance.
Who needs contractors insurance?
Contractors, subcontractors, and independent tradespeople should carry commercial contractors insurance.
As noted earlier, it not only protects your business and assets but this insurance is often required by many employers before you can start working for them.
You will find that these common tradesmen and those working in the construction industry need contractors insurance:
- Landscapers.
- Electricians.
- Carpenters.
- Handymen.
- Roofers.
- Painters.
- HVAC Contractors.
- Alarm Contractors.
- Plumbing Contractors.
- Construction Contractors.
- Railroad Contractors.
- Pool and Spa Contractors.
What does contractor insurance cover?
Typically, contractor insurance can include several different types of business insurance.
Contractor policies typically cover business liability exposures, such as injuries at work or damage to a client’s assets for which the business is responsible.
These injuries and damages would be covered by general liability insurance, which is an essential part of a contractors insurance policy.
Contractors insurance can also extend to cover business vehicles and business employees, depending on the coverages selected.
In summary, your business can choose the following types of coverage:
- General liability insurance for contractors
- Builder’s risk insurance
- Inland marine insurance
- Commercial auto insurance
- Commercial property insurance
- Workers’ compensation insurance
- Professional liability insurance.
Let’s take a look at these coverages in more detail.
General liability insurance for contractors
General business liability insurance covers contractors for third-party bodily injury, accidents, emergencies, property damage, and more.
Your general contractor may require you to have a general liability insurance policy. This coverage will safeguard your business and others on the project in case of accidents, emergencies, and lawsuits, for example.
As an example, if you damage a customer’s rare antique vase, the customer could sue you for the cost of replacing the vase. Your general liability insurance policy can help to cover the legal and settlement costs.
Builder’s risk insurance
This type of insurance covers losses or damages to buildings during construction or renovation as a result of vandalism, fire, extreme weather, and other hazardous risks.
Take, for example, if the doors of a house that your company is building are damaged during a storm, your builder’s risk insurance policy can help to cover the cost of replacing them.
Inland marine insurance
This unique coverage ensures your business property while it’s being transported or while it’s being stored by a third party.
For example, if supplies are stolen from your van while you have lunch, between driving from one construction project to another, inland marine insurance will help to cover any replacement costs.
Commercial auto insurance
Business vehicles that you use for business activity are covered by commercial auto insurance.
This kind of insurance can protect you from incidents related to accidents, such as property damage and personal injuries, and cover the expenses for them.
If you’re driving your work van and crash into the back of another driver, your commercial auto insurance will cover the car damages and any injuries the driver receives.
Commercial property insurance
Business property that’s damaged by specific accidents, extreme weather events, or other unexpected hazards is covered by commercial property insurance.
For example, in the unfortunate case, if a fire destroys your business materials that were stored in a warehouse - your business materials would be covered under your commercial property insurance policy.
Workers’ compensation insurance
Employees who are injured or fall sick while at work are protected by workers’ compensation insurance. This kind of insurance is required by many employers for their employees.
In the case of an emergency, if your employee falls off a ledge while cleaning a property’s windows and breaks a leg, your business will be covered, and medical expenses will be covered under the workers’ compensation policy.
Professional liability insurance
Professional liability insurance protects you when claims are made against your business for mistakes in performing a service, breach of contract, or professional negligence.
Your professional liability policy will cover legal and settlement costs if a client decides to sue you for missing the deadline on a construction project.
Surety bond
Your contract may also require you to purchase a surety bond.
If you can’t complete the work you were hired for, the bondholder — usually an insurance company — will make whoever hired you financially whole.
Essentially, surety bonds act as promises that the work you are contracted for will be completed.
What kind of insurance does a contractor need
Most contracting businesses have a Business Owner’s Policy, that’s BOP for short.
Business owner’s policy
BOP helps to protect the contracting business in the same way a homeowner’s insurance policy helps to protect your personal possessions and home.
A BOP combines three basic coverages, which can help to save you money while safeguarding your assets.
These coverages include the following:
- General liability insurance
- Business income insurance
- Commercial property insurance
General liability insurance
This coverage protects your contracting business from lawsuits resulting from property damage or injuries sustained at work. If one of your customers are injured at your workplace, for example, general liability insurance will help to cover any expenses.
General liability insurance can help to cover the costs associated with bodily injury claims while also covering claims of libel and slander.
However, business liability insurance does not cover liabilities resulting from the services you may provide, such as a missed deadline or professional negligence.
For claims of mistakes or omissions in your professional services, you’d need to obtain professional liability insurance separately. Professional liability insurance can sometimes be known as errors and omissions coverage.
Business income insurance
This insurance coverage essentially helps to cover any losses of income you may face.
For example, if you can’t run your business because of property damage, business income insurance may help to cover the loss of your income.
Commercial property insurance
This insurance coverage protects the place where you conduct your business and your business assets, namely the equipment your company uses, including tools, for example, both owned or leased.
If you suffer the loss of tools during a theft, commercial property insurance will cover the costs.
Are contractors required to have insurance?
Technically, yes, contractors are required to have insurance, but not always legally. Instead, you are often required to have insurance by certain contractors before you get hired.
You may be required to provide proof of business insurance before taking on a job, while it’s also a good idea for you to consider this insurance as a requirement for your business.
It’s better to be safe than sorry when it comes to business insurance as it will protect you in the event you should need to cover expenses and damages.
In other words, you are usually required to have insurance as you could be held personally liable for a mistake on the job, even if that same insurance may not be required by the law.
Contractors insurance exclusions
It is without a doubt that various losses or damages can occur in the construction industry. Therefore, choosing contractors all risk insurance ensures against the multiple risks and losses associated with this contractual work.
However, all risk contractors insurance policies may not cover every risk as there are specific events that may be excluded.
When choosing contractors all risk insurance, it’s important to look at what is covered under the policy, while it is equally important to understand what is not.
Claims may be rejected with regard to liability that arises due to the following:
- The willful act of negligence
- Infringement of terms and conditions
- Terrorist events
- War, civil, mutiny, civil commotion
- Nuclear reaction events
- Property damages due to faulty design
- Wear and tear that is deemed normal due to age, etc
- Loss or damage of financial accounts, such as bills or debt evidence, etc.
Please note that this exclusions list is not exhaustive and there are other parameters that are not covered here.
It’s important to know what exclusions may affect you in the event you need to make a claim, so we suggest you carefully examine the contractors all risk insurance terms and conditions for the correct details according to your policy.
Along with the above, any excess, as detailed in the insurance policy, will need to be paid by the policyholder. The insurer will settle only that amount that is over and above the excess.
Key takeaways
Contractors insurance is vital for protecting your business if unexpected issues occur.
With contractors insurance, you can rest assured that any injuries or damages suffered by your business will be covered.
Overall, contractor coverage ensures that uncertainties and the associated risks of running your business are taken care of.
If you’re considering contractor insurance for your business, it’s worthwhile to understand what affects the costs of insurance to understand your options.
Contractors insurance cost
When you are considering your business expenses to meet insurance costs, you need to look at the following factors.
The value of your insurance policy depends on the following variables:
- Type of project.
- Location of the project.
- Value of the project.
- The scope of contract works (i.e. construction, removal of debris).
- Required coverage amount per coverage (i.e. accidental death, bodily injury, physical damages etc.).
- Construction period.
- Contractor’s relevant experience in this type of projects.
- Use of subcontractors in the project, the surrounding areas (i.e. rivers, sea, forest, etc.).
As mentioned, whether you need insurance for a large construction project or small renovations for your home, contractor insurance can ensure you’re covered.
It’s simple to sign up for contractor insurance and obtain a free quote today.
Contractors insurance quote
When considering what types of insurance are needed for your business, it’s important to do your research and receive various quotes to know your options.
The following can provide you with hassle-free quotes while offering you high quality service.
Contractors insurance USA
For companies registered in USA you can receive quotation from Progressive Commercial.
Contractors insurance UK
For companies registered in UK you can receive quotation from Simply Business.
Contractors insurance Cyprus
For companies registered in Cyprus you can receive quotation from Pitsas Insurances by completing the quotation.
Our team of insurance experts can work with your financial budget to help you secure customized commercial auto and business insurance policies.
Pitsas Insurances
Limassol, Cyprus
01.11.2022