The Nuts and Bolts of Contractors Insurance

Typically, contractors insurance will come into play if a business focuses on one or more of the following: construction, carpentry, plumbing, cleaning, electrical work, landscaping, painting, snow removal, and more.

These categories cover a wide range of businesses and needs. Since every business is different, insurance options range from standard policies to a mix of appropriate coverages. However, some issues are common to almost every contractor, including:

• Bodily injury and property damage: Many contractors work with heavy machinery and tools. If you do, or you hire workers who do, you should be concerned with potential accidents related to your equipment.
• Product liabilities: If you deliver a product or serve food, you must consider potential injuries to those recipients, and illness.
• Medical and disability: In addition to the safety of others, it’s also important to consider an owner’s own health. An owner needs coverage in case of becoming ill or being injured.
• Errors and omissions: If you provide consulting advice, such as that provided by landscapers or others, you risk liability. Coverage is needed in case a client experiences loss as a result of the advice.

To cover each of these areas, companies will need an appropriate bundle of policies that meet the specific needs of the operations. Options include:

• General liability: This is the standard that everyone needs. It covers bodily injury and property damage. For medical costs, it covers anyone injured during the course of the work. For property costs, it includes the project contractors are working on plus third-party claims.
• Completed operations/products: This covers any products sold or distributed, as well as any issues caused on a completed project.
• Contract liability: This policy provides coverage in the case of a contract dispute. It may or may not be included with general liability coverage.
• Commercial vehicle: If vehicles are used in the business, companies need this coverage for asset protection, as well as providing coverage for accidents.
• Workers’ compensation: The regulations for workers’ compensation vary by region. In the case of solo contractors, it’s likely they won’t be required to carry this insurance, but it’s not guaranteed. Be sure to check with an agent about local requirements. If a company has employees, this coverage is needed to protect workers from injury, illness, or death. It provides for employees if they must miss work and for the contractor in case of an employee lawsuit.
• Professional liability: This is also known as errors and omission insurance. It protects the contractor in the event of an error that causes a client financial loss. It covers legal defense and settlements.

It’s common for businesses to change and grow. Contracting businesses can be particularly dynamic. As companies expand and develop, they need to maintain communication with their agents. Company owners should also review policies annually to determine their needs and make any changes necessary to meet those needs.