What is General Contractor’s Insurance?
Being a Building Contractor is a rewarding occupation. As with any type of business, you need to have insurance coverage to protect it. It would be best if you remembered that, besides your home, your business is your largest asset. Not only that, it is how you make money to pay your bills and support your family.
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Benefits of General Liability Insurance for contractors
Protects your business against injury and or property damage
From working at heights to operating heavy equipment to handling electrical wires, construction is very physically demanding and dangerous. Therefore, the potential for injury is always present regardless of how careful you are. In case of third-party bodily harm during construction activities, general liability insurance can help cover:
- Medical expenses.
- Compensatory damages.
- Attorney fees.
- Funeral expenses in fatal incidents.
Note:The policy does not cover employee injuries; you’ll need to purchase workers’ compensation insurance for this. Aside from bodily injury, there’s also the risk of damaging the customer’s property. For instance, you or one of your workers may accidentally hit a pipe, causing flooding, or knock over an expensive artwork on display, breaking it. Contractors general liability insurance protection can help pay for the cost of repair or replacement. Now, in the event you’re sued, not having general liability insurance coverage could mean paying for medical and legal expenses out of pocket. That could drain your business financially to the point of no recovery. And you don’t want that, do you?
Protects your business against personal and advertising injury
You may not mean to, but while advertising your company and services, you may copy a competitor’s slogan or mimic their advertising campaign. And they may, in turn, sue you for copyright infringement. Contractors general liability insurance covers this and more non-physical injuries, including defamation, slander (spoken) and libel (written), and publications that violate privacy. This ensures your business remains up and running because you don’t suffer any significant financial loss from the lawsuits.
Protects your business after your work is complete
Suppose any of the work your company completes causes bodily or property damage. In that case, your company may still be held liable. For example, a plumber installs a new sink in a client’s kitchen. One week later, your client discovered the sink leaks and damaged the expensive kitchen flooring. Under products-completed operations coverage, general liability insurance protection protects the plumber, who’s your subcontractor, from the client’s lawsuit over the faulty installation.
Note: You will only receive coverage if your policy is active when the bodily injury or property damage occurs.
Who Needs To Get General Contractor’s Insurance?
General Liability insurance is required by in some states, Here is the full list of states requirements .
Even if the State does not require it, most cities will require you to show proof of General Liability Insurance before issuing you a permit.
Regardless of whether or not you are required to have it as a responsible business owner, you should have it. Why would you risk everything you worked so hard for just to save a few bucks?
What Insurance Does A General Contractor Need?
General Contractor’s Insurance starts at a bare minimum with a General Liability Insurance policy. Every Building contractor should have this type of insurance. If your business has employees, you are usually required by law to have Worker’s Compensation Insurance coverage as well. Failure to have Worker’s Compensation Insurance can lead to large out-of-pocket expenses if an employee is injured on the job. It can also lead to large fines and extreme cases of criminal prosecution.
Other more specialized types of insurance coverage that General Contractors may wish to obtain are Commercial Auto policies to cover vehicles used in the course of the business, Inland Marine Insurance for General Contractors to cover the loss of tools and equipment, and Umbrella Insurance or Excess Insurance to protect from catastrophic losses exceeding underlying General Liability Insurance.
Cheap General Liability Insurance for Contractors
This covers many of the possible situations you face as a General Contractor. It covers property damage and injuries you may cause to third parties while you are doing work. You face many different risks on job sites when you are a General contractor. It would be foolhardy to operate without the proper General Liability Insurance.
Commercial Property
This type of coverage protects your General contracting business’s property if you operate in a physical location. It covers losses to the physical structure and any equipment or machinery stored there. If a covered loss damages the structure or the machinery/equipment stored inside that location, your commercial property insurance policy would help cover the cost of any necessary repairs or replacements. We all know the heavy equipment needed to run a General Contracting business is expensive. If you have a physical location, you should have this coverage to ensure all your equipment has the right coverage. Without your equipment and/or the money to replace it, you will be out of business in a hurry.
Commercial Auto
Your personal auto insurance policy will not cover any vehicles used in your business. That even includes your private car if you use it for income-producing purposes. If you use trucks, vans, or any other vehicles for your General Contracting business, you will need to purchase commercial auto insurance. This type of policy protects third-party vehicles and other types of property damage due to an accident caused by the driver of your commercial vehicles.
For example, if an employee sideswipes another car while driving a work truck, your commercial auto insurance would help cover the damages to the other vehicle and any bodily injury.
Worker’s Compensation
You will also need workers’ compensation insurance if you have any employees. That is the law in almost every State. This type of policy covers work-related injuries or illnesses that your employees may sustain.
For example, if during the construction of a new building a worker falls off the roof and breaks his back, workers’ compensation:
- Will pay for any related medical expenses.
- It will also cover the wages he lost during his recovery.
- It can also help pay for any training he might need for a new job if he cannot return to the same work due to his work-related injuries.
- It can assist with legal defense fees, should the employee take legal action.
- It will also prevent you from being fined big amounts for failure to have Worker’s compensation.
Inland Marine Coverage
Inland marine insurance covers your equipment at the job site, in transit, or almost anywhere.
For example, a General Contractors Insurance inland marine policy will cover the theft of bulldozers, skid steers, generators, and other equipment from a job site. Because General Contractors work at different job sites, inland marine coverage is essential. General Contractors’ businesses usually purchase inland marine insurance to cover their expensive and vital equipment.
Surety Bonds
We can handle all your bond needs quickly and hassle-free at Ehhutton Insurance. There are two main situations that General Contractors will need bonds:
License and Permit Bonds:
Many cities require you to obtain a bond before a permit or license is issued. That is especially true when you are building a new structure or you have to do work in the right of way, such as connecting sewers to a City system.
Payment and Performance Bonds:
General Contractors or Property owners may require you to obtain these bonds before starting a large project. These bonds guarantee that you perform the work as contracted. If your credit is above 700, these are relatively easy to get for jobs under $400,000. The cost is 3% of the contract price.
What Does General Contractors Liability Insurance Cover?
Damages to Third Parties Property
Bodily Injury to Third Parties
Product and Completed Operations
Medical Payments
Personal Advertisement Injury
- Damages to Third Parties Property. You are installing a new roof, and the wind blows materials from the roof, damaging cars below.
- Bodily Injury to Third Parties. Same situation as above, but the materials hit a pedestrian, causing an injury.g an injury.
- Product and Completed Operations. Coverage is provided for Bodily Injury and Property Damage after a project is completed. It only covers work performed during the policy period.
- Medical Payments. Medical expenses are covered for bodily injury caused by accidents during the policy period. Coverage is typically limited to $5,000.
- Personal and Advertising Injury. This is not a common claim in a General Contractor’s General Liability Insurance Policy. It usually is a copyright infringement or publication of material that slanders, libels, or violates a person’s right to privacy. You put a picture of a past client’s house on your website and do not get their approval. They sue for a violation of their privacy.
What Is Not Covered In a General Contractor’s General Liability Policy?
Injuries to Employee’s
Coverage for Vehicles
Theft of your tools or equipment
An employee steals something from a client.
Bad design or planning
- For injuries to employees, you need to have separate Worker’s Compensation insurance to have coverage.
- Coverage for vehicles, you need to have a Commercial Auto Policy to protect you for the value of the vehicles and protection against any claims for property damage or bodily injury.
- Theft of your tools or equipment. You need to have Inland Marine coverage.
- Coverage if one of your employees steals something from a client. It would be best if you had an Employee Dishonesty Bond.
- Coverage for bad design or planning. You need a Professional Liability Policy or Errors and Omissions Insurance.
- There is no coverage for faulty workmanship with a General Liability Policy.
How Much Does General Liability Insurance for General Contractors Cost?
Revenue
It should be fairly obvious that the more revenue you bring, the greater the risk of something going wrong.
Number of Employees
Again, the more people you have working for you, the greater the chance of a claim.
Experience/Claims History
If you have had a number of claims in the past, your rate will go up. Conversely, if your claims history is clean, you will pay a lower premium.
Location of Business
States like California and New York will have much higher rates than States like Texas and Indiana. Even the City where you do your work may matter.
For example, if you work in the 5 Boroughs in New York City, you can expect to pay up to 3 times as much as the same business in Houston, Texas.
Coverage Amount
If you need coverage amounts greater than $1 Million/$2 Million, your premiums will be higher.
Type of Work
If you do residential or commercial work will be a factor. Also, if you do mostly ground-up new construction, your rates will be higher.