Friday Jun 02, 2023

Contractors Insurance: Cost And Types You Need – Forbes


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Whether you have a job to remodel a kitchen, build a patio or install a jacuzzi bathtub, plenty of things can go wrong in the process. For example, faulty plumbing could lead to a water leak and thousands of dollars in property damage. Or your employee might hurt themselves on the job. That’s why you need contractors insurance.

Just like a contractor has to customize a job for their client, you can think of contractors insurance as a customized small business insurance policy that contains several types of coverage that protect your business from the specific risks that come with the job.

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Who Needs Contractors Insurance?

A contractor is hired by a client to complete a project. For example, a homeowner hires you to build an addition to their home. A contractor can be broken down into two types:

  • Contractor. Sometimes referred to as a general contractor, they are responsible for overseeing the completion of the project and fulfilling the contract. For example, completion of an addition to a home.
  • Subcontractor. A worker or company hired by the contractor to perform specific tasks or services for a project. For example, a contractor hires an electrician to install wiring in the new addition. Generally, a subcontractor reports to the contractor, not the client.

No matter if your business does general contractor or subcontractor work, you need contractor insurance to protect your business from work-related accidents. Here are examples of contractors that would need contractor insurance:

  • Electricians
  • HVAC contractors
  • Appliance technician
  • Handyperson
  • Carpenters
  • Construction workers
  • Landscapers
  • Painters
  • Plumbers
  • Concrete contractors
  • Drywall contractors
  • Excavators
  • Masons
  • Roofers
  • Snow plowing
  • Tile, stone and flooring installers
  • Tree service
  • Welders

What Does Contractors Insurance Cover?

A good contractor insurance policy contains several types of small business insurance that cover your business from a variety of problems. Those issues can include the cost of claims, lawsuits and damages to your business property. The coverage types you choose depend on the contractor business’ specific needs.

A good place to start is with a business owners policy (BOP). A BOP bundles three essential coverage types, and it’s typically cheaper than buying each coverage type separately.

Here’s what a BOP includes:

Business liability insurance

This is the foundation of a small business insurance policy. Business liability insurance covers property damage and bodily injuries accidentally caused to others (not including your employees). For example, if your tree service causes a heavy branch to land on a client’s roof, you can tap your general liability insurance to pay for repairs.

Commercial property insurance

This covers your business’s physical location and business equipment if they’re damaged due to a problem covered by your policy, such as a tornado. Commercial property insurance covers both leased and owned equipment, including items like office furniture, tools, inventory, supplies, computers, business records and valuable papers.

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