Here are some types of insurance a contractor should have or consider: Device coverage, officially called barge coverage, protects your equipment from natural events and theft. The policy can cover most contractors` equipment, from hand tools to heavy machinery located anywhere in the United States. It can be purchased as a standalone strategy or as a complement to your contractor`s Business Owner Policy (BOP). Some states, industries, and types of construction contracts require contractors to have a license bond for contractors, and in some cases, additional bonds are required. In the construction industry, no two contractors have the same insurance policy – your business is unique, as is your coverage. It`s important that you know the basics of what you have and what you might need in the future to make sure you have the most comprehensive protection. If your business owns or leases vehicles for commercial purposes, commercial auto insurance is an important coverage. Commercial auto insurance financially protects your business if you or one of your employees injures someone else with a business vehicle and protects the investment you have in business vehicles from accidents and theft. But think about it: if your contractor doesn`t have insurance, who will cover the cost if part of your home is damaged? If a worker accidentally breaks through a water line, who will pay to clean up the mess and pay the repair bills? If a contractor can`t even bother to buy insurance, do you think they will hold themselves responsible for the misadventures? Commercial contractors and developers, especially those bidding on large construction projects, are often required to purchase a large amount of insurance coverage.
Often, the cost of insurance can be passed on to the promoter; However, costs for contractors should always be an important consideration, as savings can be passed on to the project promoter and make their bids on contracts more attractive. The frequent use of independent contractors poses some problems with a contractor`s insurance program. Many construction companies use subcontractors to expand their projects with additional capacity. Many companies, most often general contractors, can even outsource 100% of their work to different subcontractors. Uninsured entrepreneurs are more susceptible to low-quality jobs, the correction of which can be costly later. In addition, you are required to bear the cost of repair or damage because the contractor you hired does not have the insurance. Professional liability insurance also protects you against negligence on your part in the performance of your duties. Suppose a contractor paints on a damp wall. Within a few minutes, the color begins to peel off.
Their failure to check if the wall was suitable for painting cost the client money and time, especially if he had to temporarily suspend the availability of his company to take over construction projects requiring your services. In this case, the claims invoked are governed by professional liability insurance. Keeping the experience modifier low does a few things: it`s a good long-term strategy to avoid paying more in insurance, and it helps you bid on projects that require certain experience change numbers. An insurance company that specializes in reducing experience modifiers will be more cautious in pursuing your open claims and will take a more proactive approach to medical care for the injured employee. For example, these insurance companies are trying strategies that include education programs on opioid avoidance, occupational medicine, and reintegration. Heavy contractors may find it difficult to participate in a BOP program due to the size of the business and the higher risk exposure, but it`s always a good idea to ask your insurance broker if you qualify for a BOP program. As a general contractor, you`ve probably seen first-hand that things don`t always go as planned and that it`s difficult to plan for every possible situation. For this reason, it is important to have the right business insurance coverage to account for unforeseen events.
Whether it`s a natural disaster or a workplace accident, business insurance can protect you from a variety of risks and liabilities and keep your business running in difficult times. Consider buying workers` compensation and general liability policies from various insurance companies – Companies are known to suggest that companies should use their workers` compensation policies to get a better deal on their other insurance policies. For painters, this is probably not the right strategy. You may need to purchase workers` compensation benefits from a more specialized workers` compensation insurance company, especially if you`re doing exterior painting. Indeed, many insurance companies declare liability, but relatively few workers` compensation companies will specify workers` compensation policies. Just be aware that being a painter means you may have to take a different approach to finding insurance. Contractors with larger operations often need to take out an insurance policy that protects their leased equipment from damage, loss or theft. We often see contractors apply for this coverage with a limit of $50,000 so that they can rent various pieces of equipment to carry out projects or offer additional services. Other factors can affect the cost of construction insurance required for your construction project. Typically, these factors are used by the underwriter to estimate the likelihood of a covered loss or the risk associated with the insurance of the project, contractor or business. Despite the difference in the exact cost, it is possible to get a rough estimate of what the total insurance coverage will cost for different projects. The following table shows the approximate annual premiums for different types of construction insurance: As a general contractor, you can hire subcontractors to perform certain tasks in your project.
It is important to know that many liability insurance policies do not cover the work of subcontractors. To protect your business, you need to make sure that you require all subcontractors to assume the same limitations of liability as your business. For example, the cost of general liability insurance for contractors and development companies varies depending on the type of projects they undertake and their claims history. In fact, because of the risk associated with construction projects, contractors pay some of the highest rates for the overall liability of any profession. The same applies to professional and deductible policies. While the cost of policies can vary widely, low-risk entrepreneurs cost less for insurance. Avoiding accidents is the best way to save premiums – Since workers` compensation is the highest insurance cost for any roofing company, avoiding accidents and maintaining a modifier with little experience is the best way to reduce insurance costs. Proving that your business has been without rights for a few years could save you about 30% in workers` compensation premiums, and the underwriter could also give you an additional discount on premiums. Subcontractor Exclusions – Many insurance companies rely on the exclusion of CG 2294 subcontractors on their general liability insurance policies.
This limits certain claims arising from the actions of your subcontractor. We highly recommend that you read our article to learn more about this, as it can impact the protection of your business. Now that you know exactly what kind of insurance coverage your general contractor should wear, you need to do another important thing: make sure it exists and is valid! There`s nothing wrong with trusting people and what they say, but there are too many risks here to just take your contractor`s word for it. For electricians, we strongly recommend that you ensure that your general liability insurance includes comprehensive business insurance. Claims involving electricians often involve an electrical fire once the project is completed. In this scenario, liability for completed operations would cover the claim. These are just a few of the scenarios that entrepreneurs regularly face. It is important to remember that you are a small business owner, that the responsibility ends with you. If something unexpected happens, you have no one to blame, I`ve said it before, and it`s worth repeating that claims against your business, if it`s not insured, are expenses you have to pay out of your own pocket. Even the most established companies would be paralyzed by big claims against their company. Even if you win the case, the lawyers` fees for defending the case are simply too high for most contractors. .