What kind of insurance does a general contractor need?

Liability issues can sprout up when least expected, much like a leaky faucet. If you run a general contracting business, it is essential to protect yourself, your company, employees, and customers.

A contractor without insurance might find themselves in these situations:

A client might refuse to work with you due to a lack of appropriate insurance
You could face fines or risk losing your business license if regulations require insurance
An incident or accident on the job could cause physical harm or damage to a client or employee
Employees or workers may sue for compensation for any unpaid work if a client breaches a contract

It’s vital to protect the business that you’ve put time and money into growing. If you remain uninsured, any claims to your business are expenses you will have to pay out of pocket. General liability insurance is a base level of insurance for general contractors.

As a general contractor, there are obvious risks that your business can face, but there can be many that are unforeseen. By obtaining insurance, you transfer these risks from you to the insurance company. There are different types of insurance that a general contractor should look at when creating an insurance plan, such as ensure any job you’re working on has builders risk insurance.

Commercial General Liability – commercial general liability insurances is a base coverage that protects you from incidents related to or that happen on the construction site, such as bodily injuries or damage to a client’s property. This policy also covers you from liability if one of your contractors or suppliers engages in misconduct or files a claim against you when a project is finished.
Professional Liability – professional liability insurance protects you from unhappy clients. This liability insurance protects against negligence on your part for undertaking specific duties and protects if one of your employees does something that impairs your clients’ home or business and decides to sue you.
Commercial Auto Insurance – commercial auto insurance protects any vehicles you use for business purposes. Commercial auto insurance focuses on the automotive property of the insured. This is an important policy to consider for any general contractors who use vehicles for transporting tools and employees from job site to job site. The commercial auto insurance policy addresses damages caused by the car or damages made to the vehicle.
Umbrella Insurance – umbrella insurance policy is similar to an excess liability policy. With an umbrella policy, you can add extended liability insurance beyond the limits of what the other liability policies cover. Your umbrella insurance policy would extend the limits for both general liability and professional liability policies.
Worker’s Compensation Insurance – worker’s compensation insurance offers protection and benefits for workers injured on the job. If a worker is injured on the job, the insurance covers their medical expenses and wages. If you do not have worker’s compensation, you will have to pay for salaries and medical expenses out of the company’s budget.
Inland Marine – an inland marine insurance policy covers damages to supplies, materials, and tools sustained when transporting from site to site. The inland marine insurance is designed to protect contractors’ property.
Builder’s Risk – risks builders face are fires, theft, and natural disasters. A builder’s risk policy insurance covers expenses related to these risks if any incidents occur when a contractor works on a project.

In Conclusion

General contractors need to ensure they are well insured to protect themselves, their employees, and their business. Having insurance is attractive to clients because it shows them that you’re a professional business, and they will be compensated professionally and promptly if anything should happen. Being a properly insurance general contractor is also appealing to employees. Workers are more likely to remain with your business longer if you are adequately insured.

When deciding on the insurance coverage, you will need to consider the risks associated with the jobs you take. It’s better to be prepared than to end up shutting down your business because of an insurance claim you can’t afford to pay.

As a general contractor, having adequate insurance is your first line of protection against any accidents, work-related injuries, and mistakes.