The Insurance Needs Of Small General Contractors And Home-Improvement Service Providers

General contractors carry out small and large construction projects from scratch to completion. They work on building sites, single-family homes, and more complex construction projects. Construction sites tend to be dangerous for workers, hence, it becomes necessary for them to make sure that they have insurance in place for their workers. It prevents any unfortunate incident from increasing their liabilities. 

As it happens, in many construction and home improvement projects, the clients require their contractors to have the necessary insurance. They know that this will help pay for unintentional damages or accidents. Further, state regulations may also need your contracting business to be insured similarly.

If you are a contractor or a home improvement service provider and are wondering what combination of coverage can give you 360-degree protection, read on!

General liability insurance

The commercial general liability insurance will protect your business and pay for the expenses related to physical injuries, property mismanagement claims, or any misconduct of your workers. It will cover you from the incidents that happen on-site, intentional or otherwise. If there is any damage to the personal property of your client, this insurance will come in handy. It will prevent you from having to pay for the repair/replacement costs from your pocket. 

Commercial auto insurance

Depending on the nature and scope of work, you may need to carry stuff to and from the work site frequently. Get your business vehicle insured for use by any of your workers or subcontractors. Commercial auto insurance will cover the costs of damage in case of an accident. It will also help pay the medical bills and other expenses for third-party bodily injuries or property damages. 

Professional liability coverage

This is associated with the quality of your services and protects you from client grievances or complaints at the end of the project. For example, if a client sues you for not delivering results as expected, you need not pay the compensation from your business resources. The insurance will pay. It will also cover the expenses of repair/replacement if any of your workers damage the client’s property in some way. Professional liability insurance is better known as Errors and Omissions coverage and is extremely helpful for general contractors. You can also extend the coverage, depending on the type and nature of the work. 

Worker’s compensation insurance

Even for independent contractors, you may need to pay for the medical bills and other expenses in case of a worker’s injury at the site. As you have appointed them, it is your responsibility to ensure safety. Risk can never be completely eliminated, so it is better to protect your business by buying workers’ compensation insurance. However, talk to your insurer once to understand the nuances of workers comp for general contractors.

Bond Insurance

Do the clients have some specific terms and conditions that you need to follow? Some clients may also ask you to sign a bond before starting work. The bond insurance will help prevent massive financial losses if you fail to meet all the conditions. Bonds could also relate to meeting specific project deadlines. The coverage will help pay the bond money, as mentioned in the contract. There are different bonds, like the surety bond, the commercial bond, and the construction bond, that a general contractor may face. Contact your insurer to understand what type of insurance will offer protection against all or most of them. 

Umbrella coverage 

Sometimes, general contractors are unaware of how much insurance they should buy to stay protected at all times. As a result, they face problems when any project requires them to have a higher amount of insurance to begin work. That is why umbrella insurance should be a priority for general contractors and home improvement contractors. The nature and scope of their work vary considerably. The umbrella policy helps cover additional insurance that they may need. 

Cybersecurity insurance

Yes, you may need this as well, owing to the large-scale digitization in every sector. With modern tools, critical business information, including names, addresses, and financial details of customers is stored on the cloud. Cyber insurance will protect you from the widespread financial consequences of data breaches, so do not forget to include this one in your insurance list. 

If a general contractor has the right combination of insurance policies in place, the scope of protections increases dramatically. The benefits of insurance go beyond financial protection. Clients are too conscious and sensitive these days and getting your business insured will help them trust your company more. The right strategy is to get the maximum cover and the right premium. That will keep you, your workers, and your customers safe.