Types of Insurance for General Contractors and Why You Need Them
Running a business is risky, more so if you’re a general contractor. There’s so much risk involved that you need to protect yourself. If you’re a general contractor without the relevant insurance, you may be gambling away everything you own.
You’re probably wondering, “why do I need general contractor insurance, and what type of insurance should I buy.” This post takes a look at your concerns. Let’s dive straight in!
Why you need general contractor insurance
Prevents bankruptcy: Thefts, injuries, and accidents are common in general contracting. A third party could have their property damaged due to your work.
Without insurance, you’ll have to pay for the damages. Depending on the amount, your business could go bankrupt.
Protects you from lawsuits: If you’re unwilling to pay the huge cost of damages, the third party could file a lawsuit against you.
Even if the court rules that you’re not liable for the damages, litigation is costly, and your finances will suffer as a result.
It’s the law: In many states, general contractors are mandated to have licenses, which requires you to carry some insurance such as general liability and worker’s compensation insurance.
Required by project owners: Project owners also need to protect themselves from liability that may ensue from accidents, injuries, and substandard work done on their property. So they make sure you have general contractor insurance before they hire you.
Protect equipment and assets: General contractor insurance also covers tools, equipment, and vehicles, helping to repair or replace them if damaged or stolen.
Types of insurance a general contractor should carry
General liability insurance
It covers injuries, damages, theft, vandalism, accident, and resulting lawsuits that may result on the job. General liability insurance protects the business and the project owner from liability.
Workers’ compensation insurance
If one of the crew falls and sustains an injury on the job, workers’ comp provides medical assistance and wage compensation, so you won’t have to pay out of your own pocket.
Commercial auto insurance
Vehicles owned by the business are used to transport tools and employees to the job site. These vehicles can be damaged, stolen, or cause damage to other people’s vehicles or property.
They could also be involved in accidents that cause injury. Auto insurance helps replace or repair the vehicles and covers the cost of injuries.
Assets such as tools and large equipment could be destroyed in a fire or stolen. Having property insurance protects the business from having to replace or repair them.
Builder’s risk insurance
Construction projects are at risk of fire, theft, vandalism, lightning, etc., while ongoing. Builder’s risk insurance protects materials, supplies, and on-site equipment.
It also covers delays that result from the damages to the property under construction.
Umbrella insurance works by extending the limits of an existing coverage to be able to provide additional coverage.
How much does general contractor insurance cost?
Factors such as the coverages you need, your deductible, amount of employees, location, and claims history all determine how much you’ll pay for general contractor insurance.
If you’re ready to protect your business with general contractor insurance that meets your needs, request a free quote to get started.