Unfortunately, accidents can occur on construction sites, endangering employees and putting costly equipment at risk for damage. One of the best ways that general contractors can protect against these risks is by investing in general contractor insurance. Contractors’ insurance policies generally protect against lawsuits and other liabilities that a general contractor may face when performing their regular duties.
- Basics Of Licensing For General Contractors
- Professions That Require General Contractor Insurance
- Georgia General Contractor Insurance Requirements
- Georgia General Contractor Coverage Requirements
- Additional Policies Contractors Should Consider
- Advantages Of General Contractor Insurance
- How To Determine What Your Insurance Needs Are
- Factors Which Determine The Cost Of Coverage
The Basics Of Licensing For General Contractors In Georgia
It is helpful to have a basic understanding of the licensing requirements for Georgia general contractors to understand how it correlates with Georgia general contractor insurance needs in the state. The following is a detailed explanation of how general contractor’s licensing in Georgia works.
Reviewing The Types Of General Contractor Licenses
Understanding the different types of general contractor’s licenses in Georgia is important to determine your precise general contractor’s insurance requirements in Georgia. There are four primary types of general contractor licenses in Georgia. These four types of licenses are:
- General contractor
- General contractor-limited tier
- Residential-basic contractor
- Residential-light commercial contractor
The standard general contractor license in Georgia is for building projects exceeding $2,500. Plumbing, electrical, utility and HVAC contractors are not eligible for this license. A general contractor-limited tier license is for contractors that handle projects costing up to $500,000. Residential-basic contractors primarily work on residential properties, and residential-light commercial contractors work on multifamily and commercial properties.
The Licensing Process For General Contractors In Georgia
Prospective general contractors in Georgia must meet the initial requirements to receive a license. This includes being at least 21 years of age and meeting the necessary education and work requirements, according to the Georgia state licensing board. Contractors must also obtain general contractor’s insurance before applying as well. Exam requirements also must be met. Specifically, contractors must take the NASCLA exam within one year of application approval.
Step #1: Meeting Initial Requirements
- Must be at least 21 years old
- Must be able to meet at least one of the following requirements:
- 4 year undergraduate degree in building construction, construction management, architecture or another related field
- 4 years or more of proven experience in the field of choice, 2 of those years being employed as a general contractor or administrator
- 4 years or more of combined experience between college courses and related field experience
Step #2: Determining What License To Apply For
Applicants need to choose what license to apply for, including general contractor license, general contractor-limited tier license, residential-basic contractor or residential-light commercial contractor license. In order to get a better idea of what license to apply for, view a Georgia general contractors license comparison PDF here.
Step #3: Complete The Georgia Contractors License Application
The four Georgia general contractor license application PDFs are available below.
Step #4: Purchase Surety Bond & Appropriate Insurance Policies
All Georgia general contractor licenses require applicants to purchase and submit proof of liability insurance and workers compensation insurance policies. However, the required coverage amounts vary by license type:
- General Contractor: $500,000
- General Contractor Limited-Tier: $500,000
- Residential Basic: $300,000
- Residential-Light Commercial: $500,000
In addition to acquiring general contractor insurance policies, applicants must also acquire a $25,000 Georgia residential and general contractors surety bond. Surety bonds protect customers against poorly performed work by the contractor or instances where contract obligations are not fulfilled.
Step #5: Additional Requirements & Application Submission
Prior to submitting an application for a Georgia general contractor license, applicants must also include the following:
- Official transcripts or letters of recommendation
- Background check consent form
- CPA reference letter
After completing the application and gathering all required documents/insurance policies, applicants should submit their application to the Georgia State Licensing Board.
Step #6: Take & Pass The NASCLA Exam
Once the application has been approved, applicants will receive written notification of the approval, along with instructions on how to schedule a time to take the NASCLA exam.
Approved applicants are required to take and pass the exam within 1 year of approval notification.
What Types Of Professions Require General Contractor Insurance?
Most contractors, subcontractors and independent tradesmen are required to carry general contractor insurance. Contractors, which are typically involved with all aspects of a major project, including the hiring of subcontractors and tradesmen, especially need a reliable insurance policy. Often, only being listed as an additional insured is not enough for subcontractors and tradesmen, and they typically require their own personal policy as well. Specifically, general contractor insurance is often necessary for construction professionals, plumbers, electricians, landscapers, HVAC technicians, carpenters and masonry professionals.
Construction professionals are often required to obtain a general contractor insurance policy before they start work at a jobsite. Common types of coverages necessary for construction contractors are general liability, workers’ compensation and builder’s risk insurance. This protects the contractor and their employees from financial loss due to a work injury, job site accident that causes property damage, and more.
Plumbers & Electricians
Plumbers and electricians carry a fair amount of risk. Plumbing insurance protects plumbers from many of their largest financial risks, such as accidentally flooding a homeowner’s basement and being held responsible for the restoration costs. Likewise, electricians have similar risks when working with homeowners. Electricians typically have a higher level of risk for personal injury as well. A general contractor’s insurance policy can be personalized for plumbers and electricians to protect them financially based on their specific risks.
Landscapers are also required to have general contractor insurance in many instances as well. Landscaping insurance can cover the repair costs of property damage that occur while on the job, damages related to commercial vehicle(s), and more. In addition, handymen and painters may also need to obtain a general contractor insurance policy before they begin work for any customers.
Heating and air-conditioning professionals should also obtain a general contractor insurance policy. If there are claims of bodily injury or property damage, then a general liability policy can cover HVAC contractors for the repair and replacement costs. HVAC technicians may also need workers’ compensation coverage if they have employees and commercial auto insurance if they drive a vehicle for work purposes, among other potential coverage needs involved with general contractor insurance.
Carpenters and handymen may need general contractor insurance regardless of whether they work as a business, contractor or subcontractor. This includes cabinetry professionals, flooring specialists, framers and more. From damage to the home’s foundation during flooring installation to an accident involving a work vehicle, general contractor insurance can help minimize the financial risk for carpenters of all types.
Workplace injuries are often one of the most common risks for masonry professionals. General contractor insurance may be required before you start on a job as a masonry professional. The policy can cover general liabilities such as personal injury and property damage, commercial vehicles, compensation for workers injured on the jobsite and more.
What Insurance Requirements Do General Contractors In Georgia Have?
General contractors in Georgia must provide proof of adequate general contractor’s insurance. For most contractors, this includes proof of workers’ compensation coverage, general liability coverage, and a general contractor’s bond. These requirements were established and are enforced by the Georgia state government. Failure to comply with the insurance requirements could lead to a denial, suspension or the loss of your contractor’s license.
Proof Of Adequate Workers’ Compensation Coverage
General contractors that have employees are required to purchase a workers’ compensation insurance policy in Georgia. This policy covers medical payments and legal costs associated with workplace injuries to one or more employees on your payroll. General contractors that do not have a reliable workers’ compensation policy are at risk of being denied a contractor’s license.
Proof Of Liability Insurance That Meets The Minimum Coverage Limit
General liability insurance is one of the most important coverages for general contractors in Georgia. Depending on the type of general contractor, there are coverage limits that must be met. For a standard general contractor license, the contractor must have liability coverage with a limit no less than $500,000, which is the same for limited-tier and residential-light general contractors. Residential-basic contractors need a minimum of $300,000 coverage.
A Georgia Residential & General Contractor’s Bond
Some counties in Georgia require contractors to obtain a Georgia contractor license bond before beginning any projects. This protects customers and project owners, ensuring the work is completed according to building codes and state laws. General contractors in Georgia most likely need to obtain a general contractor’s bond to ensure they are in full compliance with state laws and regulations.
What Types Of Coverages Are Required For Georgia General Contractors?
There are multiple coverage options that can benefit Georgia general contractors. However, there are certain policies that are likely necessary to obtain and keep your contractor’s license. Below are general contractor insurance policies general contractors working within Georgia are required to have:
General Liability Insurance
General liability insurance protects your business from claims raised by third parties that you are liable for, specifically bodily injury or property damage. When these claims arise, there are often legal fees, property repair costs and medical expenses. Your general liability insurance can mitigate your financial risk when claims of liability are issued against your company by covering the costs associated with those claims. Since liability claims are often the biggest risk to general contractors, it is important to have a general liability insurance policy in place.
Workers’ Compensation Insurance
Workers’ compensation insurance is likely a requirement for your small business. Most states mandate that businesses and contractors that hire workers ensure they are covered in the event an employee is injured at a worksite. This type of policy covers all medical costs and loss of income related to workplace injuries, which you may otherwise be liable for without a workers’ compensation insurance policy.
Commercial Auto Insurance
Commercial auto insurance covers your fleet of vehicles owned by your business. This policy is encouraged if you have multiple company vehicles or just one. It also can cover all types of company vehicles, from pickup trucks to tractor-trailers. Your policy will pay any associated costs with damage to or caused by your company vehicles. This includes costs related to property damage, damage to your vehicle, medical costs and third-party lawsuits.
Additional Policies General Contractors In Georgia Should Consider Acquiring
While there are only three main insurance policies required by the state of Georgia, the liabilities a contractor inherits may require far more than the minimum amount of coverage. Outlined below is a detailed list of policy options that general contractors should consider when purchasing an insurance package:
Professional Liability Insurance
Also known as errors & omissions (E&O) insurance, professional liability insurance covers legal costs caused by a general contractor sued over a mistake, such as failure to meet specifications or failure to complete a project.
Contractor’s Tools & Equipment Insurance
This type of policy can help pay for repairs or replacement of a general contractor’s tools and equipment, such as nail guns, saws, hammers or other supplies that are lost or damaged.
Builder’s Risk Insurance
Builder’s risk insurance is more specific for contractors within the construction industry. This policy protects you in the event your equipment at the construction site is lost or stolen. Builder’s risk insurance also can cover the replacement or repair cost if your building or structures are damaged by severe weather or vandalism.
Roofers insurance protects you and your workers when you are working high off the ground. Of course, the higher up you work the larger the safety hazard. If someone is injured while working on a roof, scaffolding or in a similar scenario, then roofers insurance covers the medical costs, claims of liability, and more.
Contractor’s Pollution Insurance
Contractor’s pollution insurance protects you from costs related to environmental laws that contractors are required to follow. Contractors should ensure they are not in violation of any environmental policies. However, if a mistake is made by a worker, or if a third party files a lawsuit claiming that you violated environmental laws, then litigation and settlement costs can quickly add up. Contractor’s pollution insurance minimizes your financial risks of these types of pollution-related concerns.
Umbrella insurance extends your coverage limits. Often, this is necessary when working with clients with larger projects. The typical limit for a standard general liability insurance policy is around $1 million. However, umbrella insurance can extend this limit much further if the financial risk, if anything were to occur, was much greater. For example, an umbrella insurance policy of $4 million would extend your coverage limit to $5 million.
Leased Equipment Insurance
You may be obligated to purchase insurance for any equipment that you lease. This includes heavy equipment, construction tools and more. By adding leased equipment insurance to your contractor’s insurance policy, you can have peace of mind when renting and be assured that you are covered if any issues were to arise.
Cyber insurance is not a requirement for contractors, but it can help mitigate your financial risk if you use online systems to store client information and payment records. If a data breach occurs, there may be PR costs, legal fees and much more.
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Advantages Of General Contractor Insurance
There are multiple reasons why a general contractor should acquire some form of insurance. From protecting your business assets and employees to avoiding potentially damaging lawsuits, Georgia general contractor insurance is a beneficial investment for any of the aforementioned specialists. Here are some of the main reasons why general contractors should acquire a policy in Georgia:
Improve Chances Of Winning Work
Professionals in the construction business typically receive their work through successful bids. When potential clients are seeking a general contractor, they want to know that the candidate is licensed, insured and follows strict safety procedures. It is not unusual for clients to ask about insurance and they may even require contractors to meet certain liability insurance limits.
Remain Compliant With Insurance Laws
In addition to helping contractors win bids, insurance may be required by law in some areas. Many state and national laws require general contractors to have liability insurance before accepting a project in case of an accident or safety issue. Insurance may also be required to cover defects in construction, such as improper pipe systems or wiring.
Keep Your Employees Free From Liability
Above all, general contractor insurance is necessary for the protection of the contractor, employees, customers and the business as a whole. No business owner wants to be stuck paying a customer’s medical or property damage bills out of pocket. Many general contractors are not financially able to pay these high costs, sometimes resulting in the forced closure of the business. The right business insurance policies can help keep the company in good standing and financially secure.
Protect Yourself In The Event Of A Lawsuit
There is a chance that a general contractor could be found responsible for bodily injury or property damage if a case went to court. If this situation should arise, insurance could help pay for any legal fees that pile up due to the lawsuit. Court cases can last for many months or even years, in which time significant legal fees can accumulate, such as attorney fees, witness fees and other types of court expenses. Business owners can have peace of mind knowing that these ongoing expenses are covered by insurance.
How Can I Determine What My Insurance Needs Are?
You should start with a thorough risk assessment when determining your specific contractor insurance needs. Consider previous liability claims that may have been leveled against you or your business, the types of projects you work on, the conditions of those work environments and any additional details that may be relevant. Also, it is important to become familiar with local, state and federal laws that apply to general contractors, including environmental and employment laws.
Of course, you do not have to come up with all of the answers yourself. If you are unsure of your contractor insurance needs, then speak with an insurance agent that has experience dealing with similar situations to optimize your insurance expenditure while still getting essential coverages.
What Factors Determine The Cost Of Coverage?
The specific coverage options you require and choose affect the cost of general contractor insurance. Your previous claims history may also play a role in the overall premium cost of your policy. You may have an option to raise or lower your deductibles as well, which can subsequently affect your monthly (or annual payments). The best way to find out the exact cost of your general contractor insurance policy is to speak with a licensed insurance agent about your commercial insurance needs.
General contractors often worry about cost when shopping for insurance policies. Pricing for contractor insurance can vary considerably based on a wide range of factors, such as the size of the business, industry, location, claims history and the number of employees. Certain types of businesses face higher risks which can translate to higher premiums compared to businesses that face lower risks. Premiums can also increase if a contractor has a history of frequent claims or if the limits of the insurance are increased.
General contractor insurance is fairly affordable, but there are ways that businesses can save even more. Bundling a general liability insurance policy with commercial property insurance in a business owners policy can save companies money. It can also be advantageous to speak with a qualified insurance broker about finding a policy that meets the business’s unique needs and budget. Take the time to compare different policies and bundle options to find one that suits the company’s requirements.
Speak With Our Georgia General Contractor Insurance Agents
Navigating Georgia general contractor insurance on your own can be difficult, especially when you are unsure of which coverages you need. Since there are multiple factors that determine what policies a contractor should carry, it is best to speak with a reputable insurance agency that specializes in working with general contractors. With a complete insurance package, your contracting company will rest assured knowing it is covered from a range of liabilities.
Southern States Insurance is a specialty insurance agency headquartered in Alpharetta, GA that offers premium coverage options for general contractors. Our team of dedicated insurance professionals work tirelessly with contractors to ensure they receive the best possible coverage for their classification of work and unique business needs. To get started with a Georgia general contractor insurance policy, reach out to our insurance agents at Southern States Insurance online today.