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Contractors Insurance Information
Operating a contracting business may include risks and exposures that threaten significant financial losses. Given the inherent dangers of the construction industry and the pressure of keeping up with deadlines, even the most experienced and responsible contractors may eventually be involved in accidents or errors. In the aftermath of such an incident, lacking adequate loss control measures could leave you with devastating out-of-pocket costs. With that in mind, a versatile and reliable contractors insurance portfolio should be among your top priorities.
What Types of Insurance Do Contractors Need?
When assembling your business’s insurance package, you should first understand that contractors insurance is typically not a single policy capable of covering all your risks and exposures. Rather, this term may refer to several types of insurance that, when combined, provide sufficient coverage. As you compile your insurance portfolio, it’s typically advisable to consider the following:
- General liability insurance—This coverage may help pay for third-party losses for which you are at fault. Liability coverage may also be required by law depending on where you operate.
- Commercial property insurance—This coverage may financially protect your business buildings and property stored there (e.g., fixed equipment and inventory).
- Errors and omissions insurance—This coverage may provide financial assistance if a client sues your business and accuses you of providing late, incorrect, negligent or otherwise inadequate professional services.
- Builder’s risk insurance—This coverage may render financial aid for damage sustained by buildings under construction, including new structures and those being renovated.
- Workers’ compensation insurance—This coverage may help pay for costs and losses related to employees’ job-related illnesses and injuries.
- Commercial auto insurance—This coverage may help absorb financial losses related to incidents involving your motor vehicles used for business.
- Inland marine insurance—This coverage may financially secure equipment and goods stored off-site or transported to a job site.
- Commercial umbrella insurance—This coverage acts as an additional layer of insurance and may provide extra financial aid if the liability limits of other policies are exhausted.
As a contractor, you may also be required to purchase surety bonds. These arrangements provide financial assurance to your clients that if you cannot fulfill your contractual obligations, they may recoup their losses.
What Does General Liability Insurance Cover for Contractors?
As its name suggests, general liability insurance casts a wide safety net across many common risks and exposures. These policies typically focus on providing financial assistance for your business if your operations or employees caused an incident from which a third party (e.g., a guest or passerby) accrued losses, such as the following:
- Personal and advertising injury (e.g., slander, libel, false advertising, wrongful imprisonment)
In response to these incidents, your general liability insurance policy may help pay for medical expenses, repairing or replacing damaged property, and legal costs.
Do Independent Contractors Need to Carry Workers’ Compensation Insurance?
Workers’ compensation insurance is one of the most common and critical types of coverage. These policies can provide crucial financial assistance to help manage employees’ work-related injuries and illnesses, such as by helping to pay for the following:
- Vocational rehabilitation
Legal requirements for workers’ compensation insurance may vary depending on your unique circumstances. While sole proprietors may sometimes be exempt from requirements, independent contractors that employ others are generally subject to workers’ compensation insurance laws. Certain clients, such as government entities, may also mandate coverage.
How Do You Know if a Contractor Is Bonded and Insured?
In addition to being insured, contractors may often need to purchase bonds to provide financial assurance to their clients. Whether you are a developer, general contractor or subcontractor, you should know the insurance and bond status of all parties involved in your project. Request proof of insurance and bonds before beginning work on a job, as even a mistake by another party could affect others involved in the project.
We’re Here to Help
Having served businesses, families and individuals throughout Connecticut for over 75 years, the agents at Svendsen Insurance are well-equipped to help you understand and acquire ideal contractors insurance. We will utilize our extensive knowledge and experience to assess your needs, explore your options and assemble an ideal coverage portfolio. Contact us today to get started.