What Types Of Insurance Should A Contractor Have ?

by Lalithaa

If you’re managing a contracting business, risks are always present. Regardless of what you specialize in, whether it’s plumbing, electrical, or masonry, it’s inevitable for your employees to end up with injuries or cause damage to the area they’re working in. Sadly, you’ll be the one to shoulder the expenses for any physical injury or property damage that happens, which can negatively impact your business operations. 

One of the ways to avoid financial loss or even the closure of your contracting business due to claims is to have the right insurance coverage. Generally, once you have the right contractor insurance, you no longer need to deal with the claims since your insurance provider will do it on your behalf. The best part is that your business will continue to operate as usual without incurring further losses.  

Although each business has specific needs, it may be best to be familiar with the basics so you’ll know whether or not you have adequate protection. Here are some of the types of insurance a contractor needs: 

  • Builder’s Risk Insurance  

Any construction project, regardless of scale, may require the usage of materials and equipment. Sadly, all these are at risk of being stolen, lost, or damaged. As a result, you’d require builder’s risk insurance to safeguard your business from these losses. The coverage tends to vary depending on the provider, so it’s wise to check it to make sure it includes all your company’s needs. 

A builder’s risk insurance also covers buildings or structures that are under construction. In most cases, the policy includes options that provide coverage to the building materials, scaffolding, foundations, and any installed fixtures. 

  • General Liability Insurance 

General liability insurance is the most common among the different types of insurance for contractors. It works by offering coverage against potential claims by third parties for sustaining any physical injury or property damage while on the job. In most cases, general liability insurance will tackle the compensation while covering any legal costs incurred during the litigation process. 

  • Commercial Auto Insurance  

Any contracting job involves transporting equipment, materials, and workers to the site utilizing a variety of vehicles. During circumstances in which any of these vehicles bring about physical injury, property damage, or death at the site, the contractor will be liable for compensation.  

Investing in commercial auto insurance ensures coverage for any potential third-party claims if damage, injury, or death happens. Generally, the insurance will cover all the legal expenses, especially if a case ends up in court.  

  • Errors And Omissions (E&O) Insurance  

Unlike general liability coverage, which covers non-negligent actions, errors and omissions (E&O) insurance protects a contractor against negligence. Errors and omissions (E&O) insurance or professional liability insurance shields businesses from possible lawsuits involving errors or mistakes made during the job.  

For a tree service company, having tree service insurance would provide coverage for potential errors or mistakes made during tree-cutting or removal services. If a client decides to sue as a way to recover the costs of these mistakes, the policy will cover the claim. 

  • Workers’ Compensation Insurance 

In any business that hires employees, it’s a priority to have workers’ compensation insurance right from the start. Workers’ compensation insurance ensures that all your employees will have coverage if accidents happen while on the job. Generally, it has extensive coverage that includes medical fees, rehabilitation costs, disability income, and compensation to families for work-related fatalities.  

Insurance should be your priority since it protects against possible employee lawsuits. In most cases, a lawsuit is likely, especially in cases involving injuries or families with deceased loved ones who might file in court. 

  • Inland Marine Insurance 

One of the tasks involved in a contracting business is the transportation of materials or equipment from one location to another. With this in mind, investing in inland marine insurance is crucial since it ensures vital coverage.  

Generally, inland insurance offers coverage on all materials, products, and equipment while they’re being transported or stored at the job site or warehouse. It’s one of the best ways to ensure protection against potential harm caused by theft, accidents, vandalism, or loss. 

  • Pollution Liability Insurance 

Some contractors handle potentially hazardous materials. Sadly, it’s a task that comes with the job. Professionals who work with plumbing, pool installation or maintenance, ventilation, and landscaping handle various chemicals. Investing in pollution liability insurance ensures coverage in handling potentially hazardous materials or chemicals that could result in property or environmental damage and bodily harm. 


Final Thoughts  

If you’re running a contracting business, insurance should be at the top of your list of priorities to have a good level of protection in case unforeseen events happen. The right insurance ensures adequate coverage for your business in case legal issues arise while your business continues to operate. These are only a few of the essentials worth investing in, so it might be time to do more research. Alternatively, you can speak with an insurance professional to make sure your business is appropriately protected and complies with your state’s insurance requirements for contractors.

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