General contractor insurance is a commercial policy designed to protect contractors against the unique risks they face in their business operations. Contractor insurance includes general liability insurance and additional coverages tailored to the kind of contracting business you operate.
Basic General Contractor Insurance Coverage
General contractors and any type of construction contractor, subcontractor and independent tradesman need commercial general liability insurance as a condition of doing business under most state laws. Additionally, proof of the appropriate level of insurance is usually required by construction contracts before you can begin working on a job.
Regardless of whether your contract or state law requires general liability or other insurance, having adequate insurance coverage is the best way to protect yourself and your business from financial loss resulting from accidents and injuries connected with doing business as a contractor.
What type of coverage and the extent of coverage your contractor business needs are not one-size-fits-all. Not every contractor needs the same coverage. The extent of coverage your contractor business needs depends on the size of your operation, the amount of property your business owns, and the nature of the risks you face, as summarized below.
Basic Coverage For Small And Mid-Sized Contractors
If you are a contractor or tradesman whose projects tend to be small, you probably need minimum coverage, as long as the projects you do require minimum insurance and bonding and your business does not have substantial investments in assets that could be lost. Minimum coverage could include:
General liability to cover damage your business may cause to a third party and liability risk while operating on the job site. A cap of $1 million is customary and is the bare minimum insurance you need to have.
Workers’ compensation will be necessary under state law if you have employees. It covers injuries and expenses of your employees if injured on the job.
Commercial Auto to cover any vehicles you use for your contractor jobs, whether the vehicles are used by you or your employees. Your personal automobile insurance will not cover property damage or bodily harm caused by those vehicles while on the job.
Equipment coverage to protect your tools of almost every kind—from hand tools to heavy machinery and equipment– from weather events and theft. The policy can cover most contractors’ equipment, from hand tools to heavy machinery.
Products and completed operations insurance cover liability arising out of your work after the project is finished.
Additional Coverage Options For Smaller To Mid-Sized Contractors
Many contractors must purchase certain additional policies because contracts on larger projects require it. Customarily, larger general contractors and project owners will only hire contractors with the insurance that protects the assets and property of those entities. The additional coverage typically includes the following:
Umbrella policy extends your coverage from $2 to $5 million for general liability, workers’ compensation, and automobile liability.
Hired & Non-Owned insurance covers automobile liability in connection with vehicles that you do not own, such as rented vehicles. This coverage does not cover vehicle owners but covers one of your employees if they are involved in a traffic accident while doing a task for your business and your business is sued for damages.
Leased Equipment is necessary for contractors with larger operations to cover any leased equipment for damage, loss, or theft. A $50,000 limit is common because it enables contractors to rent a range of machinery and equipment.
Employment Practices may be appropriate as your company hires more employees and grows. This coverage pays for your defense in employee lawsuits arising out of employer misconduct based on such claims as wrongful termination, discrimination, and many more. This insurance is prudent if you have more than five workers or if you are growing your business.
Additional Insurance For Mid-Size To Large Contractors
Larger contractors that work on large projects should consider additional types of coverage. Those commonly added to a general contractor policy include:
Errors and Omissions is professional liability insurance that protects your business against mistakes in judgment in connection with your consulting services with other errors or omissions that you or your employees may make.
Pollution/Environmental coverage to protect your company against losses caused by pollution or environmental damage due to your contracting operations or transporting waste material. The limits on coverage can be tailored to the nature and extent of the risks your company faces.
Contact Our General Contractor Insurance Experts For More Information
General contractors, subcontractors, and tradespeople need the right kind of contractor insurance for their business. The insurance experts at Southern States Insurance can help you design a policy at rates you can afford that covers the risks your construction company faces, so you do not have to pay for insurance that you do not need. Contact Southern States today for more information about what our insurance specialists can do for you.