Liability insurance is one of the most essential types of coverage for contractors. Whether you’re a general contractor, subcontractor, or construction company, contractors are often held liable for the negligence or failure to perform on behalf of their clients accordingly. Contractors often work under very stressful and tight deadlines, which can leave room for human error and mistakes. In the construction industry, things sometimes go wrong – even with all due care. If a contractor makes a mistake that causes damage to someone else’s property or business, they might need liability insurance.
This type of policy covers you if you have to pay money as a result of an incident related to your contracting services. Contractors who own their business are usually required by their lender to maintain liability insurance as a condition of getting financing. Contractors who work for others almost always require independent contractors’ insurance in addition to their home and auto policies when working on projects as an employee.
What does construction liability insurance cover?
Liability insurance covers damage or injury that you or your employees cause to other people or their property. If a contractor is sued for damages, liability insurance covers court costs and legal defense fees if the contractor is forced to go to court. Generally, liability insurance covers bodily injury and property damage to others caused by the contractor or the company’s negligence.
That includes accidents caused by company employees, unsafe work conditions; or failure to warn someone of a potential danger related to the project. Contractors also must cover their acts of negligence while on the job. Liability insurance also covers defense costs if someone files a lawsuit. These lawsuits can tie contractors up in court for months or even years, which is extremely costly. Liability insurance covers the cost of defending the suit, along with any judgments or settlements.
Why is Liability Insurance Important for Contractors?
Liability insurance is critical for contractors. If a contractor causes a problem and does not have insurance coverage to help pay for damages, the contractor will be held liable for the cost. A contractor with insufficient coverage or no coverage may be forced to pay for the damage out of pocket.
This means the contractor will be responsible for covering the cost of repairs, medical bills, and other expenses related to the incident. It’s important to be prepared with enough coverage to protect yourself in the event of a claim. Contractors often work in high-risk environments, and one careless mistake could result in significant losses, time spent in court, or fines and penalties.
Contractors are responsible for paying for any damage they cause while on the job, even if they have an insurance policy. However, if they have liability insurance, they can make a claim on their policy to pay for the damages.
Who Provides the Coverage?
Liability insurance is provided by an insurance company that specializes in contractor insurance. To find a contractor’s insurance company, use the contractor’s insurance questionnaire, which is available on most insurance companies’ websites.
You can also visit a local insurance agent and request a list of contractor insurance companies in your area. When you’re shopping for a policy, compare the coverage amounts, deductibles, and other terms and conditions to find the best policy for your situation. Make sure to read the fine print and ask the insurance company about any coverage you are unsure about.
The amount of coverage a contractor need varies depending on the type and size of the project, and the contractor’s industry. General Liability Protection – The minimum amount of coverage contractors should carry is $100,000 per occurrence. Contractors should also carry $300,000 in total coverage. However, contractors who work with more expensive projects may want to consider higher coverage amounts.
Contractors’ Professional Liability Insurance – The minimum amount contractors should carry is $2,000,000. Equipment Breakdown and Repairs Coverage – The minimum coverage amount contractors should carry is $2,000. Defective Workmanship and Materials Coverage – The minimum amount contractors should carry is $50,000 per occurrence.
However, if your project is larger or more sensitive, your minimum coverage should be increased accordingly. For example, projects that involve the handling and use of hazardous materials must be insured for a higher amount.
Construction contractors often find themselves in situations that require liability insurance. Liability insurance is a coverage policy that protects contractors from incidents involving third parties. Liability insurance for contractors covers bodily injury, property damage, and legal defense costs resulting from the contractor’s negligence. Liability insurance is one of the most essential types of coverage for contractors.
Whether you’re a general contractor, subcontractor or construction company, contractors are often held liable for the negligence or failure to perform on behalf of their clients accordingly. Contractors often work under very stressful and tight deadlines, which can leave room for human error and mistakes.
In the construction industry, things sometimes go wrong – even with all due care. If a contractor makes a mistake that causes damage to someone else’s property or business, they might need liability insurance.