Understanding Contractor Insurance Choices

If you work as a contractor or subcontractor, insurance is necessary to protect your business from problems such as accidents, lawsuits, damages, theft, and lost income. The right policy offers several types of coverage for optimum protection. Discover what contractors need to succeed and protect their companies from financial distress.

Do You Need Contractors Insurance? A contractor who needs insurance is anyone hired by a client to complete a specific project, such as painting a house. The two types of contractors are contractors and subcontractors. A contractor oversees the fulfillment of the contract to finish a project, while the contractor hires a subcontractor to perform some or all of the project requirements. Both contractors need insurance to cover work-related accidents and other possible liabilities.

More Than One Type of Coverage Different types of contractor insurance are included in a good policy to cover companies for various problems. Potential issues may include lawsuits, damages, and the cost of claims to your business. Many contractors start with a business owners policy (BOP), which contains three essential types of coverage: liability, property damage, and business interruption insurance.

What is Business Liability Insurance?

Business liability insurance is the foundation of most policies because it covers bodily injuries and property damages accidentally. For example, if your crew is cutting down a tree and it lands on the client’s house, general liability insurance pays for the repairs. Therefore, general liability coverage should always be part of the policy when you get contractor insurance.

What is Commercial Property Insurance?

A commercial property insurance policy covers the company’s location and equipment if they are damaged by events or incidents covered by the policy. Also, leased and owned equipment are covered by this insurance, including business records, tools, office furniture, supplies, and inventory.

What is Business Interruption Insurance?

What if a fire or theft caused your company to close its doors to recover? Business interruption insurance replaces lost income to cover problems such as lost earnings, money lost due to damaged merchandise, wind damage, and the cost of temporarily moving to another location to continue operations.

Do I Need a Commercial Auto Policy?

Business insurance does not include commercial automobiles, which are covered separately. Therefore, if your company relies on vehicles to conduct operations,

investing in commercial auto coverage is critical to ensure all accidents and injuries are covered. Coverages to consider include body injury liability, property damage, combined single limit, medical payments, collision, comprehensive coverage, and uninsured motorist coverage.

Is Additional Coverage Available for Contractors?

While general coverage is the minimum required for contractors to have peace of mind, additional coverage is available for specific situations that could cause financial duress. Often, coverage is based on the work performed and level of liability. For example, insurance is available for professionals who challenge their work quality for errors and omissions. This coverage protects contractors if someone says they did the work incorrectly or offered inaccurate advice.

Insurance is required to protect your assets and operations if you run a contracting or subcontracting business. Without proper coverage, one situation could permanently cause your business to close its doors. Consult with a local insurance professional today to protect your company in the future. Then, your company is ready to handle any project or problem by having the proper coverage.

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