What is Contractor Insurance?
Contractor insurance is an insurance policy designed to cover your business operations from claims of bodily injury or property damage to third parties such as clients or the public because of your business operations.
The core coverage of a contractor insurance policy is commercial liability insurance.
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Why You Should Have Contractor Insurance
As a contractor you will be expected of clients to complete tasks and you will be entrusted with client’s property or you will be working amongst the public. Even with best intention and upmost care, accidents do happen and this exposes you and your business to a risk of a lawsuit.
What Level of Liability Insurance Does My Business Need?
We offer liability insurance starting with $1 Million in coverage for some policy types, but we recommend you to have a minimum of $2 million. This is because compensation claims are increasingly rising as well as the values of property that contractors are typically working with. Working with clients or cities, they often require you to show proof of at least $2 million in liability insurance. Ultimately you need to determine yourself an adequate limit based on what risks and exposures you have as a business owner.
Depending on the nature of your business you may need or want even more coverage. And it is starting to become normal that clients and governments are demanding $5 million or more as the complexity of projects and risks increase.
A Real Life Example of a Contractor Insurance Claim We Once Covered:
A contractor was hired to install an Ethernet internet cable in a senior’s residence. When drilling through a wall, the contractor accidently hit a main water supply pipe. This caused damage to the floor and walls below.
|The Amount Paid By the Insurance Company||$82,500|
|The Amount Paid by Our Contractor||$1,000|
As you can see our contractor was responsible for paying their $1,000 deductible and the rest was paid by the insurer. The contractor’s insurance policy only cost $1,500 annually.
What Are Common Exclusions under a Contractor Liability Policy
Although every policy is different and it is best to speak with a Licensed Broker about an individual policy, typical exclusions may include:
- Injury to owners and employees
- Poor or faulty workmanship
- Events that give rise to pollution
- Design work or advice
- Among Others – others exist and it is best to speak with a licensed broker.
What About Other Business Insurance?
Commercial General Liability insurance for contractors is only just an example of one type of coverage in a business insurance policy; other coverage may be available depending on the type of business you operate.