Contractors today deal with a variety of challenges in the process of completing their projects. Supply chain issues, scheduling subcontractors, and managing budgets all contribute to the progress of your project. But administrative aspects of your business also need to be in place to maintain your compliance with local and state requirements, such as your contractors insurance.
With that in mind, let’s discuss the basics of contractors insurance and what you should consider before purchasing your policy.
What Is Contractors Insurance?
To understand the basics of contractors insurance, you must first know what it is. Contractors or construction insurance is a broad categorization of insurance policies that provide protection during construction projects. Your insurance will determine the type of coverage you need, such as the person’s relationship to the project, the type of entity buying the insurance, and the type of project being covered.
Insurance companies also tend to bundle multiple policies into packages based on specific construction trades. For instance, you might have insurance bundles for electricians and plumbers that focus on potential risks for those trades.
For a general contractor, several types of insurance might be included in their contractors insurance bundle, such as the following:
Builders Risk – Coverage for buildings and other structures during construction can include foundations, machinery, scaffolding, paving, fencing, outdoor fixtures, lawns, trees, and plants.
General liability – Provides liability protection to businesses in the case of bodily harm or property damage during the course of business. State or local requirements can set minimums for the general liability insurance you must carry. These policies can cover a broad range of damages, including:
- Faulty workmanship
- Job-related injuries
- Advertising injury and defamation
Professional Liability Insurance – Provides business coverage against claims arising from errors or mistakes. Specialized contractor policies also cover claims arising from work performed, but the claim set is typically more limited.
Commercial Auto/Truck Insurance – Auto insurance coverage for the vehicles used by your business. It is intended to help policyholders avoid high vehicle repair costs, medical expenses, or lawsuits relating to auto accidents. That can also include medical, uninsured motorist, and physical damage coverage.
Contractor License and Construction Bonds – These guarantees allow you to comply with the regulations applying to your contractor’s license. The main difference is that this bond protects the general public and anyone the contractor does business with. Construction bonds guarantee that you will complete the project and are available for various aspects.
Workers Compensation – Coverage designed to protect businesses and contractors when their employees are injured on the job. It covers the following:
- Medical expenses
- Missed wages
- Ongoing recovery costs related to an injury
- Legal fees when the policyholder is sued
- Funeral costs and death benefits
If you want to get the best contractors insurance for your business, you need to understand what your business requires to comply with your licensing and keep your projects on time and on budget. Contact us today for a quote and determine the best bundle.
Top Contractors Insurance Services is a full-service contractor insurance agency handling workers’ compensation, general liability, construction bonds, and auto quotes.