Construction starts for single-family housing in California are up 18% year over year and multifamily housing starts are up 7%. Contractors report growing business, with steady upward trending, although nothing near the boom years of 2003-2005. Pent-up demand for housing is driving the current rapid construction rate.
California contractors need insurance to take part in the rapidly expanding marketplace. The law is clear regarding construction insurance. At a minimum, a contractor must carry Worker’s Compensation Insurance and performance bonds.
Commercial general liability insurance is recommended, but not required by law. However, most contracts require general commercial liability, builder’s risk, a performance bond, and professional liability insurance. Then there’s coverage for your vehicles, tools, and your mobile office.
General contractor insurance doesn’t have to be complicated or difficult. Read on to learn more.
Risk Management and More
Winning business is about more than just your smile and handshake. You also need to prove your capacity to get the job done. By law, you need to produce your certificate of insurance for Worker’s Compensation and your license when you accept a contract. Most contracts also require a level of general liability insurance, performance bond, and professional liability insurance.
Without adequate proof that you have these types of insurance, your bid will not be considered.
Construction Insurance is Not Just One Policy
A large general insurance agency might sell you one type of policy, but you want an agent who can guide you through all the options to pinpoint the best fit for your needs. Lawsuits are commonplace in today’s construction climate and guidance on the kinds of insurance to buy can make or break your business.
Look for an agent who specializes in the construction contracting business and who understands the challenges of the trades. Trends in the industry point to a shortage of skilled workers. This shortage could lead to inexperienced or unqualified workers increasing claims for worker’s compensation, property damage or worse.
Your agent should understand and explain your policy endorsements and exclusions. You might think your policy covers the tools in your truck, a bad batch of lumber or a subcontractor, but this may not be the case.
Price is Not the Only Factor
In California, liability policies pay out claims based upon “occurrence” or “claims made.” An occurrence policy covers events that occur during the policy term. The claim can be made at any time.
A “claims made” policy coverage depends on whether the policy is in force when the claim is made, not when the problem happened.
Another factor to consider is the financial stability of the underwriting insurance company. Certain types of contracts require the construction insurance policy to come from a company to be rated grade “B” and above by Standard & Poor’s or A.M. Best.
Protect Your Business
Make sure that you have knowledge and experience to back up your risk management. Specialty insurance for contractors is not a “one-size-fits-all” policy. It is a group of policies with each offering protection for certain aspects of the business.
To learn more about the types of insurance you need to protect your business, contact an agent today.
Top Contractors Insurance Services is a full-service contractor insurance agency handling workers compensation, general liability, construction bonds, and auto quotes.