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Types of Insurance Contractors Must Consider

workplace accidents and injuries can happen – no matter how skilled or experienced your crew is.

Whatever industry you're contracting business operates – whether it's in construction, roofing, plumbing, etc., you need the right insurance policies to protect your business and employees from unexpected events. Also, some states require contractors to carry specific coverages before granting them a license.

As no two contracting businesses are exactly the same, there is no one formula for building the best contractor's insurance portfolio. To ensure that you have the proper coverage in place, you need a clear idea of the possible risks that your business may face, and a good understanding of what the different insurance policies cover.

Insurance Coverage Policies for Contractors

Not having enough coverage is a huge financial wager that can potentially drive your business to the ground. Browse through this list for a better idea of the important contractor's insurance options.

 

Commercial General Liability Insurance

Physical injury is quite common in the construction business, and so is accidental property damage. When things like these happen onsite, the affected party may sue the contractor and file a claim for the damages. Some claims are so big that they can run your business into the ground if you don’t have insurance.

General liability insurance is an essential part of any contractor’s insurance portfolio. It provides coverage for 3rd party damages and liability claims associated with ongoing operations. The policy also includes incurred legal expenses, in case of a lawsuit.

Builders Risk Insurance

Many insurance companies offer contractors general liability and builders risk insurance together. This policy is especially useful for subcontractors or those renting out heavy equipment for a project.

Builders risk insurance protects builders and contractors from liabilities in case of equipment loss due to theft, damage, or neglect.

Workers Compensation Coverage

work comp class codes

Those who are working on contracting projects are at risk of workplace accidents or getting injured. While some injuries take no more than a quick trip to the hospital, some are more severe; others even fatal.  In fact, one in five workers’ deaths in 2018 were in construction. 

If you’re the kind of employer who looks after the welfare of his employees, worker's compensation insurance should be one of your priorities. This policy covers the medical and rehabilitation expenses for injuries on the job site. It also takes care of employees’ disability income and compensates them for disability – or their family in case of death.

On your end, workers’ compensation is an excellent way to protect your business from claims by injured employees or their families.

Automobile Liability Insurance

Commercial Auto Insurance

Most contractors require several types of vehicles to transport equipment, materials, and the crew to the project site. While these vehicles make everything so much more convenient, they are quite expensive to repair and maintain. Even worse is when they get involved in an accident that results in property damage, physical injury, or death.

Should any of the following scenarios happen, you may find yourself at the receiving end of hefty liability claims from the affected party.

If you have automobile liability insurance, you won’t have to worry about using your business’ funds to pay for claims and legal costs.

Inland Marine Coverage

Every contractor should carry inland marine insurance, or what's commonly known as equipment coverage. This policy provides coverage for most types of contractor's equipment, from heavy machinery to hand tools.

The insurance will compensate your losses if equipment gets stolen or damaged by some natural phenomena – whether it's onsite, on the road, or anywhere in the country.

Inland marine coverage is usually suggested as an add-on to standard Business owner Policies, but you can also purchase it as a stand-alone.

Pollution Insurance

Contractors are at risk of being sued by third parties for violating environmental laws. But as pollution liability is explicitly excluded from the coverage of your commercial general liability insurance, you have to purchase it separately.

If your company operations involve processes that can be viewed as “polluting," pollution insurance can help safeguard your business interests from the financial and legal burden of potential environmental lawsuits.

Roofers Insurance

Roofing is often considered one of the most dangerous jobs. Data from the BLS’ National Census of Fatal Occupational Injuries revealed that 54 out of 100,000 fatal work injuries in 2019 were in the roofing industry...

A lot of things can happen when you regularly work several dozen feet above the ground, and on an uneven surface at that. One wrong step or one miscalculated move could be fatal.

If you’re in the roofing business, roofers insurance is a must. Without it, you’ll be paying out of pocket for any accident, injury, or property damage that occurs while completing a project.

Protecting Your Contracting Business

As much as you want to protect your business from every possible risk, you don’t need to purchase all the items on this list – just the ones most appropriate for the type of contracting company you operate. If you’re not sure which ones to pick, consult a trusted insurance company for advice.

Having the right insurance coverage is immensely beneficial in your field. Not only will it help boost your reputation and credibility; it will also show your commitment to the safety of the people you work with.

Bio:

Rachel Porter is the content specialist for Custom Contractors Insurance, LLC, an Arizona roofing and contractors insurance company. When not writing, she enjoys reading and mountain biking with her friends.

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