When you work in the field, many unforeseen things can happen. They can harm you, your workers, assets, and the owner’s property. That brings financial and legal risks that can harm your business and industry reputation. That’s why you should be covered. Here’s how people usually deal with bad contractors.
Contractor liability insurance is an excellent way to protect yourself and your employees from various risks. You need a policy that covers your assets and workforce. It should also include your property and vehicles. The more coverage you have, the better. In general, this policy helps you avoid losing money in the event of a lawsuit.
Why You Need This Coverage
General liability insurance will protect your work if you are sued for negligence. This type of coverage includes property damage and bodily injuries. As the insurer will compensate for these, you won’t have any costs. It comes in handy when you can’t pay the client for the damage right now.
Also, this policy helps you avoid losing money in the event of a lawsuit. The damaged client has the right to sue you if you violated the agreement for any reason. General liability insurance will compensate for this damage and pay for all expenses resulting from this claim.
Some construction companies require their contractors to carry a liability policy before hiring. It covers property damage, workplace accidents, and lawsuits that clients may file. That way, these companies won’t be liable and pay for contractors’ mistakes.
Who Needs Contractor Liability Insurance
If you work as a contractor, you need general liability coverage. Regardless of the industry you work in, this policy protects your business from lawsuits and damages caused by faulty work. It’s necessary for the safety of your employees and the reputation of your company.
Working within any trade carries certain risks – plumbers have to work with water and gas, electricians face electric shocks, etc. General liability insurance protects you against legal penalties arising from accidents. Also, it helps you stay compliant with local construction laws and regulations.
How to Get This Coverage
As an independent contractor, you can purchase a general liability policy or ask your client to add you to their insurance. For the first option, you contact the insurer and choose the best policy. You pay premiums and get a certificate of insurance. It’s a document that your clients may request before hiring.
As for the second option, your clients add you to their insurance policy as long as you work for them. You are not fully covered as they are, but you can still be compensated in certain situations. But it’s not a cost-effective option for clients as it increases their premiums.
How Much It Costs
The answer to this question depends on your needs and how many policies you will need. The more policies you purchase, the more favorable your premiums will be. You can buy a comprehensive policy to secure your employees, work assets, supplies, vehicles, etc. Your contractor’s insurance must include coverage for the equipment you use in your work, whether it’s leased or all yours.
To find the right policy, you can visit any insurance website and get a quote based on your company and project size. You should also evaluate the risks your business faces. Every industry has different risk factors which will require different amounts of coverage. Also, your insurer will consider a history of claims filed against you and how you solved them.
Risks of Not Having Liability Insurance
By having general liability coverage, you will protect your business not only from financial losses but ruining its reputation. For example, an electrician working for a construction company can cause major power outages to the entire building by making a rewiring mistake in a single apartment. That might cause many appliances to die, causing major damage to the property owner and other apartment owners.
Without contractor liability insurance, the construction company employing the electrician can face many lawsuits. It will have to pay for all damages, whether out-of-court or in court. Besides the large financial loss, this situation can negatively affect the company’s reputation in the industry.
In the construction industry, it’s always better to be safe than sorry. Many things can interfere with your work and trigger consequences for all parties involved in the project. To avoid liability for these mishaps, get contractor liability insurance, and have peace of mind.