If you are a contractor, you may be uncertain about the type of insurance that you require to protect yourself and to reduce the likelihood of financial losses. The kind of work you engage in influences the insurance coverage that is critical to your field.
Building Contractors who give advice and consultancy services such as interior designers, architects or engineers may be normally concerned about liability exposure arising from the losses that clients may suffer due to following their recommendations. This liability is covered by errors and omissions insurance, also called professional liability insurance.
Those contractors who work using heavy equipment and tools like electricians, plumbers and construction contractors need to worry about accidents related to the risks of working with power tools, pressurized gas and faulty machinery. Therefore they need insurance coverage dealing with property and bodily damage.
Contractors Liability Insurance
Getting the appropriate contractors liability insurance can protect you against lawsuits, accidents and property damage which can wreck your business. Ordinarily you require several different categories of coverage to have complete protection against liability.
General liability Coverage
This is the fundamental form of contractor insurance coverage. The general liability policy offers two kinds of protection, bodily injury coverage and property damage coverage:
- Bodily injury insurance provides coverage if the contractor or his or her employee causes death or injury to any third party in the course of work. It offers medical care to the injured person, and covers the contractor’s legal defense in case the contractor is sued for damages.
- Property damage coverage gives coverage in case the actions of a contractor or his or her employee result in damage to another person’s property. This includes the property or building a contractor is working on or a property belonging to a third party.
Completed Operations/Product Coverage
This insurance provides coverage in case a contractor’s finished project has any issues or brings about any damage. This can extend to include any products one is distributing or selling.
Advertising personal injury coverage
This coverage caters for the risk of damaging other people’s reputation or causing losses through libel, slander or false advertising.
Business Owners Policy
The general liability coverage for a contractor is often bundled (combined) with a number of other insurance coverages to form what is called a business owners policy (BOP).This offers two advantages. It extends the reach of the policy to cover other risks faced by small business owners. It also leads to a discount on the total costs of your insurance. This coverage is especially useful if you have employees.
- Property damage-this protects your rented or owned property: storage facilities, garages, office buildings and warehouses. Commercial vehicles are not covered.
- Business income – This gives protection against loss of income in case your business gets interrupted by a covered loss. It covers operating expenses and income up to one year.
- Commercial vehicle – insures your vans, cars, trucks or any other vehicle you use for business operations.
Contractors Pollution Liability
Contractors encounter many pollution-related risks in their day-to-day operations at job sites. Examples include accidental fuel leaks, toxic chemicals and gases emanating from broken or faulty pipelines or tanks and disposal of contaminated soil. Contractors’ pollution liability protects against such hazards that are normally associated with construction work.
A contract bond guarantees that if obligations spelt out in a contract are not met, your client gets compensation. For instance if you fail, as a contractor, to complete a project as required, your client is paid the bond amount. The client is then able to hire another contractor to complete the project .This bond is mostly used in the construction industry.
An important point to understand is that after payment of the bond, the insurance company pursues recourse against you, the contractor, to be reimbursed the amount paid to the client.
Designing an appropriate insurance cover plan is a critical step, especially if your business is expanding in terms of operations and employee numbers. Due to the numerous types of insurance coverage and options, it is advisable to engage the help of a McLean Hallmark broker to assist you to get the best customized coverage for your business.