Contractors Insurance – Your Business’s First Line of Defence

Running a contracting business can be like operating in a risk-laden world every single day. There are accidents at your site, your site and equipment getting damaged, customer complaints, and equipment breakdowns. While your skills and expertise play an extremely vital role, they’re not exactly enough to safeguard your business against unforeseen events. That’s where contractors insurance steps into the picture.

Why Every Contractor Needs Insurance

Insurance needs to be viewed as the backbone of your business, as essential as the footings you pour for a structure. Without it, one lawsuit, one accident, or one large claim could be the end result of all your hard work. So asks a recent issue of Contractor’s Estimate. And it asks an excellent question.
Because if an employee suffers an injury on your worksite, medical expenses and lawsuits alone could cost you hundreds of thousands of Pounds. Will your business be able to withstand that blow—is the answer, likely no.

Aside from offering financial security, it’s highly likely that some of your clients and general contractors will refuse to work with you without proof of adequate insurance. It’s almost a standard clause within contracts. From here, it becomes easy to see that insurance isn’t just a form of business security but something more: it’s an enabler.

Necessary Types of Coverage for Contractors

General Liability Insurance: General Liability Insurance is the cornerstone of contractor insurance. It will protect you against any injuries or damages you might have caused third parties. It would be a disaster for your business if someone broke an arm because they tripped on your tools. It would be even more disastrous if your neighbor suffered expensive hardwood floor damage because your equipment leaned against it. General Liability Insurance would absorb these costs.

Workers’ Compensation Insurance: You will be required to have Workers’ Compensation Insurance in most states once you hire employees. This will pay for your employee’s medical expenses and loss of income if he or she sustains an injury while working. Perhaps more significantly, it will safeguard your business against ruinous lawsuits from disgruntled employees who have suffered an injury on your watch. Even as a sole proprietor, you should obtain this insurance for yourself.

Commercial Auto Insurance

This type of insurance is very important if you or your employees use cars for business. Personal auto insurance will not protect you if there’s an accident when you are transporting equipment to and from a job site or if you use a business-owned truck. Commercial auto will protect against damage and liability for accidents involving business autos.

Tools and Equipment Insurance will protect your source of income. As an investment, your tools will be vital for your business. Without them, due to theft, fire, or damage, your business will be brought to a standstill. It will allow you to have your necessary equipment replaced and get back to business.
Professional Liability Insurance, also known as error and omission insurance, shields you against allegations that your work did not meet professional standards or caused financial loss. It will deal with your legal expenses and payouts due to defects, which result in expensive repair costs because of some structural defect in your work or project delay because of your designs.

Calculating Your Needs for Coverage

Finding your optimal coverage amount depends on your honest risk exposure. You have to calculate your annual revenue, size of projects, number of employees, and type of business. Trades involving high risk, such as roofing and electrical contracting, will have higher coverage limits compared to low-risk businesses.

The amount of general liability coverage your contracting business should have varies. A common practice among contractors is to carry at least a million Pounds. Larger projects may necessitate two million Pounds or more. You should carefully examine your contracts for specifications on a minimum amount set by your clients. It would be a good practice to review your needs on an annual basis as your business develops.

Advantage of a Business Owners Policy

Instead of acquiring different policies, contractors can opt for a business owner’s policy that combines general liability, property, and business interruption insurance into a single policy. By so doing, they end up paying less money compared to acquiring different policies and get all the necessary protections.

Managing Your Insurance Costs

Although it’s necessary to carry insurance, it doesn’t have to be expensive. Effective safety procedures will significantly reduce accidents and, as a result, lower your costs. By taking safety courses and maintaining your equipment properly, you demonstrate your commitment to safety to your insurer.

You might want to consider raising your deductibles as a way to lower your premium costs, but make sure you would have enough money set aside to pay the deductible amount. A good way to receive a discount on your premium costs might be to purchase multiple policies from one provider. Also, it will be very advantageous if you could maintain a claims record.

Picking Your Partner Insurance

Not all insurance carriers will have an equal understanding of the contracting industry. You want to seek out carriers who have experience with contractors’ insurance and your type of trade.

You should work with an experienced insurance broker who can search among several carriers on your behalf. You should also seek referrals from fellow contractors and not be afraid to ask carriers tough questions about these issues.