What Type of Insurance Do Contractors Need?
As a Southern California contractor, you know that each job comes with its own set of risks. From accidents and lawsuits to equipment loss and property damage, the financial consequences of not having enough insurance could be devastating.
What type of insurance should a contractor have? Here's everything you need to know to protect your business and your livelihood.
Don't Have Coverage? Here are the Financial Risks You Face
With comprehensive contractors insurance, a single accident on a job site could result in thousands of dollars in out-of-pocket costs—or worse, the end of your business. Medical bills, legal fees, equipment replacement and even contract penalties can halt your operations and bury you in debt.
The good news? The right insurance plan provides the peace of mind you need to focus on the task at hand and get the job done.
Key Coverage Options for Contractors
General Liability and Excess Coverage
A general liability policy can cover property damage, legal defense costs, and bodily injury, and is a must-have for contractors. Excess liability offers another level of protection by providing additional limits beyond your standard policy, helping protect your business from major lawsuits.
Property In Transit
Your materials and tools don't stay in one place —they're transported between job sites. There's a lot that can happen while your necessities are being brought from place to place, and property in transit coverage protects your necessities while they're on the move.
Scheduled Equipment and Tools
Do you rely on expensive tools, specialized equipment, or costly machinery? Then you may want to consider scheduled equipment and tools coverage that protects those valuables from damage, vandalism, or theft.
Equipment Leased or Rented to Others
As an additional revenue stream, many contractors lease out their equipment. If you're one of them, equipment leased or rented coverage protects against loss or damage when your property is in someone else's hands.
Professional Liability
Liability insurance for contractors helps protect you from claims of:
- Negligence
- Failure to deliver services as promised
- Design flaws
This coverage is especially important if you work on design-build projects.
Pollution Liability
Because construction work can have unintended environmental consequences, such as soil contamination, many carry pollution liability coverage. Such a policy would help cover cleanup costs and related legal claims.
Employee Dishonesty Coverage
This type of insurance for contractors protects you from financial losses caused by dishonest acts committed by employees, such as theft.
Policy Add-Ons and Considerations
- Waiver of subrogation and primary wording: Often required in contracts, this coverage can ensure your policy responds first in the event of a claim.
- Blanket additional insured endorsement: Instead of naming individual parties in your policy, you can get this endorsement to automatically include any party you're contractually required to insure. This saves both time and money.
- Bid bonds and performance bonds: Bid bonds help show that your bid for a job is serious, while performance bonds ensure you'll complete the project as agreed, giving everyone involved peace of mind.
- Pre-project aggregate: Rather than one liability limit that applies to all projects combined, this option allows you to have a separate liability limit for each project. If you juggle multiple jobs, a pre-project aggregate could be a smart choice.
Protect Your Business With the Right Coverage
Ready to learn more about your options and the cost of contractors' insurance? Hoffman Hanono Insurance has everything you need, all under one roof. From general liability for work to personal insurance for your home, we've got you covered. Connect with us to get started.