General Contractor Insurance 101- What You Need To Know
The market has a wide range of insurance packages for contractors. Understanding what to look for while choosing an insurance policy can be a difficult task. Given the industry that contractors work in, several elements of the work expose them to liabilities.
Whether it’s a small, medium-sized or a large company, contracting involves employees and hazardous work which requires the business to protect itself against liabilities. Contractors’ equipment could also get an insurance cover.
Different industries have specific insurance needs, but there are common areas in general contractor insurance that every contractor should pay attention to keenly. Every general contractor needs to have an insurance policy, and here are a few things that you, as a contractor, need to know about the general contractor insurance.
- General Liability Insurance
A contractor is only human, and so mistakes can happen on the job. For example, a painter who has been contracted by a client could spill paint on an expensive carpet. If the client demands payment over the damages, a general liability policy should cover such claims.
The general liability policy covers third-parties. Third-party claims can cause severe financial dents to a business, depending on the claim. In some contract work, body injuries happen and so the covers the medical bills.
- Equipment Insurance Cover
Anything could happen to your tools of work. You could lose your materials for the job in your storage facility or even on the transit to the workplace. If such a loss occurs then your business suffers a setback. By getting coverage for this, you cover those costs.
- Automobile Insurance
If the company owns any vehicle, then they should have a comprehensive insurance cover that protects the business against liabilities. You require a non-owned auto policy for your employees in case of an accident while on the job.
- Additional Insured
Typically, most general contracts demand that the contractor has liability insurance, and the policy should name the owner as an additional insured. Subcontractors also require that the general contractor be named as an additional insured.
This additional insured clause of the policy ensures that if there’s a third-party claim arising from the work of the subcontractor, then the general contractor can make a claim from the subcontractor’s policy. It’s essential that a general contractor ensures that the additional insured is part of the insurance policy that they purchase.
Why Is It Important To Have Insurance That Works?
The size and the kind of contractor work that you engage in determines your insurance needs. A comprehensive insurance coverage protects a company from a financial loss or crisis brought about by legal claims. Insurance also allows the contractor to conduct business because some clients don’t work with contractors who don’t have an insurance policy.
Besides the financial gains that a comprehensive insurance cover gives the contractor, it also assures your employees that you are able to take care of them in case of an injury on the job. Having a policy that works gives you peace of mind and you can focus on other areas of growth in the business.