What Type of Insurance Do You Need as a Contractor
Posted on Aug 28, 2020
As a contractor, you wear many hats. You may perform a dozen different jobs in one day on a single jobsite or on multiple sites throughout your service area. These are just a few of the hats you may wear on any given day:
- Electrician
- Plumber
- Roofer
- Painter
- Landscaper
- Drywaller
- Builder
- Masoner
- HVAC contractor
- Heavy equipment operator
Because of these many different responsibilities, you need to be protected in many different areas. For this reason, there isn’t a one-size-fits-all contractor insurance policy.
Instead, it’s important for contractors to work with an independent insurance agency that can help you determine the right coverage for your contracting business and get you the coverage you need.
What Insurance Should a Contractor Have?
While there are a wide array of business insurance products, the following types of coverage are among the top insurance products home improvement contractors may require.
- General liability insurance for contractors. Provides coverage for property damage, bodily injury or advertising injuries caused while working on projects and for completed projects. Most business owner’s policies (BOPs) contain some general liability protection. As a contractor, you will likely desire additional general liability protection beyond what your BOP provides.
- Builders risk insurance. This insurance protects tools, equipment, and supplies on jobsites against a variety of events, including fire, theft, vandalism, and other events for the duration of construction. If your tools get stolen from a construction site overnight, this insurance protection helps you replace them.
- Business auto insurance. Offers liability and other protection for yourself and your employees while driving business-owned vehicles. If you have employees who use their own vehicles for work, you want to make sure you have non-owned vehicle coverage added to your business auto policy to protect your business if their insurance is insufficient. It’s an added layer of protection that is well worth the investment.
- Contractors pollution insurance. Environmental laws are no laughing matter in the U.S., and the penalties for even accidental violations can be severe. This vital insurance helps to cover legal fees and the costs of cleanup, property damage, and bodily injuries related to pollution events.
- Workers’ compensation insurance. This insurance is required in all 50 states. It provides workers with coverage for medical bills, lost wages, and permanent injuries associated with accidents, injuries, illnesses, and deaths occurring arising out of and in the course of their employment.
- Professional liability insurance (errors and omissions). For contractors, errors and omissions is a must. While general liability insurance may provide protection for damage resulting from your work, E&O insurance should be purchased by contractors who provide design and building services and includes coverage for mistakes made by the contractor as well as those made by third-parties hired by the contractor. The bottom line is that as a contractor, you need both professional liability and general liability insurance for rounded protection.
- Inland marine insurance. This valuable type of insurance protects materials, equipment, tools, and more as they are being transported over land. This means that the tools and supplies you’re transporting to a job site are protected from damage by this insurance coverage.
- Umbrella insurance. You’ll need many different types of liability protection as a contractor. Each policy has a different coverage or protection limit (the largest amount the insurance will pay out for that particular policy). Umbrella insurance offers additional liability protection beyond what these other policies provide. It kicks in only after you’ve exhausted the total liability protection of your primary policy and offers extra liability coverage for you as a contractor.
- Equipment breakdown insurance. Some of the equipment you’ll use as a contractor is very costly to purchase and repair. This insurance helps cover the costs of repairs if your equipment breaks down from mechanical or electrical failures – damage that is otherwise excluded by most general property damage coverages. Not only does this protect the equipment you use on the jobsite, but it can help to cover the cost to replace or repair other types of equipment, such as photocopies, fax machines, and printers, that you use to conduct your business.
Otterstedt Insurance Agency has been serving the needs of New Jersey and surrounding area business owners and contractors for more than 100 years. We believe that a large part of our success relies on us helping you meet your needs to protect your business rather than focusing on our needs to sell insurance.
