income protection insurance for contractors…
Contractor insurance covers your construction business in the event of a lawsuit, on-site injuries, equipment damage, and more. This type of coverage may be required by law or by the contracting entity that hired you.
While most contractors need multiple business insurance policies to cover these various risks, you can usually purchase them all from the same company.
What is contractor insurance?
Contractor insurance is typically a set of policies that cover your business in the event of a claim being made against you. Generally, contractors need general liability and inland marine insurance, depending on the size of your business, what is required in your state, and the type of work you do.
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Contractor insurance protects you from things like:
- Your materials are stolen from your truck.
- A client files a lawsuit against you for faulty work.
- Accidental damage to a client’s property while working on one of the client’s appliances.
What does contractor insurance cover?
When it comes to contractor insurance, there are a variety of business insurance options available. For example, your construction business may need:
|Type of Insurance||What it covers|
|General liability insurance for contractors||General Liability Insurance for Business Liability for Third-Party Bodies Injury, Property Damage and More
Your general contractor may require that you have general liability insurance to cover your business and others involved in the project in the event of a lawsuit.
For instance, if you accidentally spilled paint on your client’s unique rug, the client could file a lawsuit against you to recoup the costs of replacing the carpet.
General liability insurance can help pay for legal fees and settlements.
|Inland marine insurance||Inland marine insurance covers business property during transportation or storage.
For example, if you are transporting supplies for a landscaping project from one location to another and they are stolen from the truck while you are stopped at a service station.
|Builder’s risk insurance||Damage or Losses to Buildings during Construction or Renovation due to Fire, Weather Events, Vandalism, or Other Hazards.
If your company’s windows get damaged during a windstorm while your company is constructing a new home, the cost of replacing them can be covered by the builder’s risk insurance.
|Workers’ compensation insurance||Workers’ compensation is provided to employees who suffer an injury or illness while on the job.
Most states require employers to provide workers’ comp to their employees.
For example, if your employee slips down a ladder painting a home and breaks their arm, they would be covered by workers’ comp.
|Commercial auto insurance||Commercial auto insurance covers vehicles that are used for commercial purposes. It protects you from costs associated with accidents, including property losses and injuries.
For example, if you are backing up an electrician’s van and have an accident with another vehicle, commercial auto insurance covers the damage to your vehicle and any injuries sustained by the other driver.
|Commercial property insurance||Commercial property that is affected by certain incidents, weather events, or other risks.
For example, a fire that destroys your commercial roofing inventory, such as shingles, tiles, and other materials, would be covered under commercial property insurance.
|Professional liability insurance||If you’re a general contracting company and a client is suing you for something, like making a mistake or not doing something right, breaking a contract, being careless, or not delivering a service on time, your business liability policy will cover the costs of legal and settlement.|
You might also need to buy a surety bond in your contract. Surety bonds are like a promise that if you don’t get the job done, the bondholder (usually an insurance company) will cover the financial burden of whoever hired you.
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How Much Does Contractors Insurance Cost?
When it comes to contractors’ insurance, there are a few things that will affect the cost. First, you’ll need to decide what kind of coverage you want and what your policy limits are.
Generally, if you have more coverage, you’ll pay more for insurance.
Second, the number of employees you have will also affect the cost.
Third, your insurer will look at your past business claims history to figure out how much you’ll pay.
And finally, they’ll probably take into account other factors like your assets, property, location, and payroll size to come up with the total cost.
6 Ways to Save on Contractors Insurance
- Compare business insurance quotes
- Implement a safety program
- Classify your workers correctly for workers’ comp
- Join a trade or industry association
- Pay your premium in full
- Increase your commercial car insurance deductible
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Who Needs Contractors Insurance?
A contractor is someone who’s hired by a customer to take care of a project. For instance, a homeowner might hire you to help them build an extra room in their house. There are two types of contractors:
Contractor. They’re sometimes called general contractors, and they’re in charge of making sure the project is finished and the contract is paid off. For instance, if you’re adding an extra room to your house.
Subcontractor. If you’re a contractor, you need to make sure you have the right insurance to protect yourself and your business from any work-related injuries.
A contractor hires a worker or company to do certain jobs for them. For instance, an electrician might be hired to install wiring for a new addition.
A subcontractor is someone who works for the contractor, but they don’t report directly to the client.
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Whether you’re a general contractor or a subcontractor, you need insurance to make sure you’re protected. Here are some examples of contractors who might need it:
- Tree Service
- Concrete contractors
- Appliance technician
- Construction workers
- Drywall contractors
- HVAC contractors
- Snow plowing
- Tile, stone, and flooring installers
The cost of business insurance can vary a lot depending on the size of your business, where it’s located, and if you’ve ever filed a claim. Generally, policies with bigger limits or smaller deductibles are more expensive.
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There’s also some variation in the construction industry. For instance, roofers can pay double the price of general liability insurance compared to plumbers, and five times more than sheet metal contractors.
That’s because roofing carries more risk, both in terms of injury and damage to customers’ property. When you get a quote from an insurance company, it’s best to compare several quotes to get the best deal for your business.