Contractors Insurance

As a contractor in today's day and age, every job you take on comes with its own set of risks. Contracting requires specific obligations and legal responsibilities. If any mistakes are made that cost a client, this client has the right to make a claim against you, and these kinds of claims can become quite expensive for a contractor. In addition, the vast majority of clients today legally require that a contractor be covered by some level of contractors insurance, before any contract is accepted.

When it comes to purchasing contractors insurance, there are several important factors to consider. For starters, all clients are granted with a legal recourse by law, which allows the client to claim for any mistakes or negligence on the part of the contractors. An agency contract, in most cases, will not fully protect a contractor.

With proper contractors insurance, a contractor can be fully protected and insurance, allowing the contractor to work freely with peace of mind.

What is Contractors Insurance?

Contractors insurance provides protection for a general contractor, developer, or builder, as well as its employees and agents, against lawsuits, liabilities, expenses, or other costs that may result from a claim against the building or property. Examples of these claims include but are not limited to roofing or electrical failure, faults, leaks or safety issues.

Contractors insurance must be sought and selected by the contractor, builder, or developer prior to starting any type of construction project. Acquiring this insurance will help protect the contractor and associated parties against various liabilities.

Who Needs Contractors Insurance?

There are several state laws requiring that contractors have one or more types of contractors insurance. Some of the contractors that need contractors insurance include but are not limited to framers, roofers, landscapers, excavating and foundation contractors, and those who work in demolition. There are also other types of contractors including computer contractors, design contractors, and more, who would benefit from securing at least one type of contractors insurance.

The Different Types of Contractors Insurance

There are many types of contractors insurance, some of which include General Liability insurance, Worker's Compensation insurance, Commercial Auto & Truck insurance, Inland Marine insurance, and Disability insurance.

General Liability Insurance

General Liability insurance provides invaluable asset protection for companies against financial loss. This type of insurance protects all types of businesses who may be sued by a claimant for property damage, completed operations or products liability, advertising injury, personal injury or other reasons. General liability insurance can either be purchased by itself, or it can be combined in a package policy that usually includes two or more other types of coverage. A commercial package policy typically includes two more coverage forms that are customized to the needs of the insured. In the package, you can include commercial general liability insurance, commercial property insurance, commercial auto insurance, inland marine, crime insurance, and more.

Another important factor to know about general liability insurance or business liability insurance is that these types of coverage usually have maximum limits that the insurer will pay per claim. The common limits on these types of contractors insurance are: $1 million for each occurrence, $2 million for general aggregate, $2 million for products liability and completed operations, and $1 million for personal and advertising injury. These limits will typically suffice for a small business. Larger businesses should seek the option of purchasing additional coverage limits (called excess insurance). In most cases, businesses will purchase at least $1 million worth of excess liability insurance.

Additional limits on a commercial package policy can also be added, and are known as an umbrella insurance policy. Umbrella insurance rates are often less expensive when applied to package policies.

Worker's Compensation Insurance

Worker's compensation insurance provides coverage for statutory benefits to employees who are injured on the job site. All employers have an important and legal responsibility to their employees to make the workplace a safe environment. As safe as a workplace can be, accidents can (and often do) still occur, even in the safest of work environments.

Worker's compensation insurance was created to protect employers from any and all lawsuits resulting from workplace or work-related accidents or illnesses. It also provides medical care and compensation for lost income to employees who are hurt in workplace accidents, or hurt in places other than the workplace while on the job. Nearly every state requires this type of contractors insurance for all businesses.

Workers compensation insurance provides payments to injured workers no matter who was at fault in the accident. The payment is issued for time lost from work, as well as for medical and rehabilitation services. This type of contractors insurance also provides death benefits to surviving spouses and dependents.

Regarding this insurance, each state in the U.S. has different laws that govern the amount and duration of lost income benefits, the provision of medical and rehabilitation services, as well as how the system is administered. For instance, in several states, regulations dictate whether the employee or employer can choose the doctor who treats the injuries, as well as the manner in which disputes about benefits are resolved.

It is important to note that workers compensation insurance must be purchased as a separate policy. There are several types of commercial/contractors insurance that are sold as package policies - but these typically do not include coverage for employee injuries.

Inland Marine Insurance

Inland Marine insurance protects the transportation of goods over land. This type of contractors insurance covers any goods while in transit, anywhere except on the high seas. The property is required to be movable or be included in the nationwide definition of marine insurance. Because they are instruments of transportation, both bridges and tunnels are also considered appropriate subjects for inland marine insurance.

Disability Insurance

Disability insurance is the type of contractors insurance that protects an individual's future earnings. This kind of coverage seeks to replace a worker's income and provides benefits in the event that person becomes physically unable to work. Also known as "Accident and Health Protection," or "Accident and Sickness Protection," disability insurance is a type of contractors insurance that should be sought by all workers.

It is difficult to prepare for the medical costs that severe injury or sickness can bring, and accidents and injuries can often occur with the worst possible timing. Without disability insurance, you simply may not be prepared for the loss of income that often accompanies such an unfortunate circumstance. Anyone who relies solely on their job to cover such bills as the mortgage, rent, and food should seriously consider purchasing disability insurance.

Bonds

Contractors' insurance companies typically also offer a variety of bonds. Most bonds are designed to protect a contractor, builder, or developer against substandard work that does not comply with local building codes. Some institutional lending companies, insurance companies, and/or commercial banks typically require contractors to secure bonds for large jobs. The types of bonds include contractor's license bonds, performance or contract bonds, surety bonds, street obstruction bonds, and license & permit bonds.

Contractors are required to have a contractor's license bond of at least $10,000 or more. Performance or contract bonds refer to the guaranteed satisfactory completion of a project by a contractor. Surety bonds represent the agreement providing for monetary compensation in the event of a failure to perform specified acts within a stated time frame. The surety company is thus responsible for fulfillment and replacement of a new contractor if the insured contractor defaults.

What Are the Costs?

The prices of contractors insurance vary from carrier to carrier, but in many cases, these costs are less expensive than you may think. The cost will depend on a variety of factors, including the level of insurance required, the annual turnover of the contractor's company, the number of employees in the company, the history of workplace accidents or illnesses in the company, the location, etc.

No matter what type of contractors insurance you need, we can help you find excellent coverage for the right price. For more information, click for a free quote or call our contractors insurance specialists at (516) 294-1072 today.

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