Understanding Contractors Insurance
Whether it is building houses, commercial buildings, or other structures, general contractors have a lot of responsibilities on their shoulders. General Contractors are responsible to oversee all construction operations from ground zero. A lot could go wrong between dealing with schedules, coordinating with subcontractors, hiring labor, and ordering construction materials. General Contractor Insurance gives the general contractor peace of mind so they can focus on the construction without the hassle of worrying about operational risks.
The major insurance policies for a GC to consider are:
- General Liability Insurance
- Commercial Property Insurance
- Commercial Auto Liability Insurance
- Professional Liability Insurance
- Builder’s Risk Insurance
- Worker’s Compensation Insurance
- Inland Marine Insurance (contractors equipment)
Assess these risk scenarios to understand the potential business risks of your profession.
General Liability Insurance
Property damage that occurs after a job has been completed and relinquished to the owner caused by incorrect installation or product is likely to occur in your line of business. This scenario would be covered under the Products and Completed Operations coverage, part of the General Liability policy. General Liability coverage provides financial protection for claims and lawsuits, paying for defense and legal liability awards and judgments. Many clients require contractors to carry Commercial General Liability Insurance to be awarded a contract and most of the time excess or umbrella coverage is also required.
Worker’s Compensation Insurance
Workers’ Compensation is mandated in most states. State laws make the employer liable for injury to employees while on the job. Most employers are unable to fulfill that financial responsibility on their own so they purchase a worker’s compensation policy. By purchasing this policy, the employer transfers the responsibility to pay lost wages, medical expenses, or death benefits to the insurance company. Since construction has a higher rate of injury than other industries, it is important to secure workers' compensation to assure employee wellbeing and comply with state law.
Commercial Property Insurance
Commercial Auto Insurance is like a package policy in a way since it can include liability for property damage or bodily injury to others, usually some first-party coverage such as No-Fault or Personal Injury Protection and medical expense for occupants of the vehicle. Physical damage such as comprehensive and collision coverage can be included for your vehicles. Contractors may have heavy-duty vehicles that transport construction equipment and material back and forth. If your employee runs a red light while driving a business vehicle, hitting another car, this policy will cover the damage to the vehicle and bodily injury of the other party.
Commercial Auto Liability
Commercial Auto Insurance is like a package policy in a way since it can include liability for property damage or bodily injury, usually some first-party coverage such as No-Fault or Personal Injury Protection and medical expense for occupants of the vehicle. Physical damage such as comprehensive and collision coverage is included for your vehicle. Contractors may have heavy-duty vehicles that transport construction equipment and material back and forth. If your employee runs a red light while driving a business vehicle, this policy will cover the damage to the vehicle and bodily injury of the other party.
Professional Liability Insurance
If you provide design or construction management services, you have professional liability exposures. Suppose you are remodeling a client’s private residence and some of the architectural designs included in the plans have been missed during construction by your framing subcontractor and the residence collapses. The client sues you for faulty workmanship and ensuing damage and bodily injury. Hopefully, your sub has general liability insurance but your business is also on the hook for liability, since you hired the sub and may have not properly supervised them, Since this was an omission on your part as the Construction Manager, this insurance policy will respond to such lawsuits.
Builder’s Risk Insurance
This insurance applies to structures under construction from the ground up or even for partial renovations. Buildings during construction whether residential or commercial are provided coverage on a builder's risk policy. A regular property policy will not pay for damage to buildings under construction unless there is a special endorsement providing such coverage. Theft, fire, wind, hail are examples of the perils insured.
Most contractors prefer getting an all-inclusive insurance package. Whether you are a contractor or a subcontractor, you will need this insurance. Our agents will evaluate your business needs depending on the following factors:
- Services offered
- Annual Revenue
- Number of Employees
- Owned Commercial Property and Business Equipment