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Contractor Liability Insurance Policy Information

Contractor Liability Insurance

Contractor Liability Insurance. Having contractor liability insurance is not a legal requirement. However, there are some compelling factors that make it difficult to run a contracting business without this coverage.

Before we bring these to light, let's first describe what contractor liability insurance is in contrast to other types of commercial insurance.

Also known as commercial general liability insurance, contractor liability insurance is a policy that covers your business from the risk of personal injury claims, wrongful death, property damage, slip and fall on your business premises, and claims of infringement by other businesses.

There are many endorsements out there that are tailored to suit different business settings.

Contractor liability insurance protects your contracting business from lawsuits with rates as low as $37/mo. Get a fast quote and your certificate of insurance now.

Below are some answers to commonly asked contractor liability insurance questions:

What Is Contractor Liability Insurance?

Contractor liability insurance is a type of insurance that provides financial protection to contractors against legal claims for property damage, personal injury, and other losses that may arise from their work. It covers the costs associated with defending against lawsuits and compensating victims for damages.

This insurance is important for contractors as it protects their personal assets and provides peace of mind in the event of a legal dispute. Contractor liability insurance may be required by law or by clients before starting a project, and it is essential for anyone who works in the construction industry.

How Much Does Contractor Liability Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 Contractor Liability Insurance policy for small contractors ranges from $37 to $59 per month based on location, industry, payroll, sales and experience.

Why Do Contractors Need Liability Insurance?

Contractor Drilling

You could be liable for claims against you if you choose an inadequate policy or one that does cover what type of contracting you are doing. For instance - if a painter is doing both interior and exterior painting and only has coverage for interior and damage is caused when painting a home's exterior.

1) To protect your business assets: Without coverage, your tools, bank accounts, vehicles, properties and more are vulnerable and could be seized to settle claims in a court battle or in out of court arrangements.

Remember, several businesses have been left bankrupt after their assets were seized. If you remain ignorant or knowingly continue neglecting general liability insurance, you not only risk immense losses but you could also lose your business altogether.

2) To have peace of mind while running your business: With a good policy, you can run your business without being anxious about certain risks and incidents.

To be precise, contractor liability insurance is seen as a survival plan in that you will continue running even if a court judgment is passed in favor of a party that is suing you. Besides, in such a case, the insurance company litigates on your behalf and pays for all legal defense fees up to your policy limits.

3) To win the confidence of potential clients: In this age when information is as easily accessible via the Internet, clients have learned to research before hiring. They are being advised to check whether a contractor has insurance before hiring; without coverage, you are at a disadvantage against your competitors that do

What Does Contracting Liability Insurance Cover?

Contractors need to know what will be covered and the limits to which it extends. Note that liability coverage protects you from third party claims:

  • Bodily injury claims - If visitors to a site where your employees are working sustain injuries, you can use the policy to cover their medical expenses, funeral expenses in the case of wrongful death, and compensation for pain inflicted and lost wages. Like stated before, this type of contractor liability insurance policy covers claims by third parties. This implies that employees will not be covered if they sustain injuries while working. The policy also protects you from slip and fall cases by clients or visitors to your business premises.
  • Completed products claims - You are protected against claims by clients who are injured or inconvenienced by services and products that you already delivered. To illustrate, if you install cabinets in a home remodeling project and they end up injuring your client or a member of their household, you will be held responsible for the damage and the resulting injuries.
  • Advertising claims - A general liability policy will come in handy in the case where business claims that you copied their advertisement or marketing techniques. Such cases often attract huge compensation penalties; you do not want to risk losing your assets or the proceeds you work so hard to generate.
  • Property damage claims - If someone or a third party alleges that you damaged their property, they are eligible for compensation by your business if the court finds you responsible. Again, you will use your contractor liability insurance policy to settle such claims.

Tips On Shopping For Contractor Insurance

  • Consider your limits: - In this context, limits refer to maximum amount an insurance company will pay out on claims. Be careful with limits and be sure you have high enough coverage. For example, if your cover has a limit of $500,000 and you happen to lose a lawsuit where the plaintiff is claiming $600,000 then the additional $100,000 will be out of pocket for you. Talk to an insurance broker if you need help determining your limit.
  • Do you need deductibles?: - Deductibles can be used to keep your lower insurance expense. A deductible refers to the amount of money you would be willing to pay out of pocket before the insurance kicks in. It is important to note that most general liability insurance policies do have deductibles.
  • Purchase from a A rated company: - Buy your policy from a A rated company. A reliable insurance company is described as one which guides you to the right policy instead of imposing something expensive on you. Besides, they should sell you a policy that does not harbor hidden costs. Research well and compare offerings by several companies to make a sound decision.

What Does Contractor Liability Insurance Cover & Pay For?

Contractor Liability Insurance Claim Form

Below are some examples of contractor liability insurance claims and what insurance can help cover:

1. Property Damage: A contractor may face a liability claim if they accidentally damage a client's property during the course of work. For example, a contractor might accidentally cause a fire while doing electrical work, leading to extensive property damage. Contractor liability insurance could cover the costs of repairing or replacing the damaged property, helping to shield the contractor from having to cover these costs out of pocket.

2. Bodily Injury: Another common type of claim involves bodily injury. If a contractor or one of their employees inadvertently injures a client or a third party while working, a claim could be filed. For instance, if a ladder falls over and hits someone, the injured person could sue for medical expenses, lost wages, and pain and suffering. Contractor liability insurance can help pay for these expenses, protecting the contractor's finances.

3. Incorrect Work: A contractor might face a claim for incorrect or incomplete work. For example, a client might allege that a renovation wasn't completed correctly or to their specifications. If the client sues, the contractor could be held liable for the costs to redo the work. Contractor liability insurance could potentially cover these costs, depending on the specifics of the policy.

4. Reputation Damage: Claims can also be filed for damages to a person's reputation. For example, if a contractor or their employees make false statements about a client that harm their reputation or cause them financial loss, the client could sue. Contractor liability insurance could help cover the legal fees, court costs, and any settlements or judgements related to the defamation claim.

5. Failure to Complete a Project: If a contractor fails to complete a project on time or at all, they could face a liability claim. The client could sue for the costs to hire a new contractor and any losses caused by the delay. Contractor liability insurance could help pay for these costs, providing financial protection for the contractor.

In all these instances, it's important to note that the specifics of what is covered can vary greatly from policy to policy. It's crucial for contractors to thoroughly understand their insurance policy and to work with a knowledgeable insurance agent to ensure they have the coverage they need.

Contractor Liability Insurance - The Bottom Line

This is a question most first time commercial insurance buyers ask. The obvious truth is, there is no set price or a standard. Your policy can cost you anywhere in the range of a few hundred dollars to thousands of dollars a year. It all depends on the risk involved and the size of your business.

Additional Resources For Contractors & Home Improvement Insurance

Learn about small business contractor's insurance, including what it covers, how much it costs - and how commercial insurance can help protect your contracting business from lawsuits.

Contractors And Home Improvement Insurance

The contracting industry is a field that involves a lot of risks, both for the contractor and for the clients they work for. This is why commercial insurance is so important for contractors. Insurance can protect contractors from a variety of potential losses, such as:

Liability: If a contractor causes damage to a client's property or if a client is injured while on a job site, the contractor could be held legally responsible. Liability insurance can cover legal fees and any settlements or judgments that may be awarded.

Property damage: Contractors often use a lot of expensive equipment and tools, and there is always a risk that this equipment could be damaged or stolen. Commercial property insurance can help cover the cost of replacing damaged or stolen equipment.

Business interruption: If a contractor is unable to work due to an unforeseen event, such as a natural disaster, insurance can help cover their lost income during this time.

Workers compensation: If a contractor or one of their employees is injured on the job, worker's comp can help cover medical expenses and lost wages.

Overall, commercial insurance is an important risk management tool for contractors. It can provide financial protection against a wide range of potential losses, helping contractors to stay in business and continue serving their clients.

Minimum recommended small business insurance coverage: Business Personal Property, Employee Dishonesty, Contractors' Equipment and Tools, General Liability, Employee Benefits Liability, Umbrella Liability, Automobile Liability and Physical Damage, Hired and Non-owned Auto & Workers Compensation.

Other commercial insurance policies to consider: Building, Business Income with Extra Expense, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Accounts Receivable, Builders Risk, Computers, Goods in Transit, Installation Floater, Valuable Papers and Records, Cyber Liability, Employment-related Practicesand Stop Gap Liability.

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