Working as a general contractor involves working on people’s homes and businesses to provide quality services. However, property damage can occur from time to time. Having contractors’ insurance as required by various states gives you a level of coverage for these claims. Here is what a property damage claim involves and how it can impact your business.
Basic Faulty Work Claims
Most of the property damage claims are often the result of faulty work claims derived from the homeowner’s complaints regarding how you performed the work on their home or business. Your client might also claim that your work did not meet industry standards or was not of the quality outlined in the contract.
Many contractors’ problem is that their general liability insurance often does not cover the property damage resulting from a faulty work claim. In order for it to be covered, several points need to be satisfied.
First, the claim has to seek property damages from a time within your insurance policy period and needs to be in the coverage area. If it was simply based upon poor workmanship but no property damage occurred, then the claim would likely be denied. Secondly, the property damage needs to have happened during a specific accident or occurrence.
If the lawsuit or claim is based only on a breach of contract, then there is no occurrence, and thus your liability contractors’ insurance is unlikely to cover the claim.
Do You Know Your Exclusions?
Many times, not knowing the exclusions on your policy can mean that your contractors’ insurance covers something you think is not covered at all. A general liability policy often has several exclusions that could eliminate coverage for any claims that fall under faulty work. Therefore, it is essential to know what your policy will cover as part of general liability.
If your work is deemed faulty, then it is not likely that your general liability policy will cover the costs associated with redoing that work. Additionally, if your completed work is damaged, then your general liability policy is unlikely to cover the damage.
Still, it is essential to note that contractors’ insurance and general liability policies have some exceptions to the exclusions. Make an appointment with your insurance agent to go over your policy exclusions and what exactly is covered. They can use different scenarios to give you an idea of what to expect if you have to file a claim for property damage under the policy.
If you are unsure if you have enough general liability coverage for your business, contact us today to learn about the options available.
Top Contractors Insurance Services is a full-service contractor insurance agency handling workers’ compensation, general liability, construction bonds, and auto quotes.