Contractors that are looking to start a business are often surprised by the various risks that they will need to protect their enterprise against. Having insurance for your business can be an effective form of protection against a range of potential hazards, but there are a few particularly important types of insurance that you should consider purchasing for your business. A contractor needs insurance and although there are many types of coverage a general contractor could use the most important coverage is general liability and workmen’s compensation insurance.
Why do contractors need this type of insurance? Here are a few reasons why insurance can keep contractors safe.
Protects Contractors From Mishaps or Damage
Insurance can protect against any damage a contractor could incur at their place of work. If a contractor has a problem completing a job or something happens in the place of work to the structure or other parts of the workplace, the insurance will kick in and pay for damages.
Product or Service-Related Liabilities
For contractors that sell supplies and materials, it can be possible for manufacturing errors or design oversights to create a potentially dangerous product. If individuals are injured while using your product, they may be able to file a lawsuit against your company. By having product liability coverage in place, you will be protected against risk. Enterprises that provide services should still consider investing in the service equivalent of product liability, such as errors and omissions.
Covers Workplace Injuries
Some kinds of contractors’ Insurance like workers’ compensation cover contractors and their employees in the event that an injury might occur when working on a job. This type of insurance will likely be legally required for your business. For individuals that will have employees working for them, it can be a legal obligation to invest in workers’ compensation coverage. Every contractor who works on a project whether directly in contact with the homeowner or simply working as a subcontractor for another contractor, must carry workmen’s compensation insurance to cover possible injuries on the job.
This coverage will protect your workers in the event that they are injured while working for you. In addition to being a legal requirement, it can also provide you with important benefits against the costs of treating your injured employees. If you are legally required to carry this insurance and you fail to invest in it, you may be liable for the medical expenses of your workers along with major fines from the government.
Minimizes Financial Risk
While independent contractors are generally not required to carry workers’ compensation insurance, you should opt to do so. Since an injury can cost you a lot of money, contractors’ worker’s compensation insurance can protect you from those sorts of financial risks. You should always check the state’s regulatory agency for updates as rules about who needs coverage change over time. Keep in mind that some homeowners will not want to work with a contractor who is not covered by insurance.
Workmen’s Compensation Insurance
Contractors should ask subcontractors to carry workmen’s compensation insurance. So, let’s say one day as the contractor you bring in a subcontractor to do countertop installation in a kitchen remodel. If the subcontractor doesn’t have insurance and is involved in an accident and falls, they may decide to sue the homeowner who could be liable for the injury. Of course, the homeowner could very well win the case but it is still a time-consuming effort.
Business Interruption Protection
Accidents and disasters can be an unfortunate risk for any type of business. When a disaster or major accident damages the building, it could force the business to close its doors until repairs are able to be made. Being closed for a long period of time can be a devastating blow that many businesses may never fully recover from experiencing. Business interruption coverage will provide your company with at least a portion of its normal revenues during the time that it must be closed. This will help your company to survive this period.
A general liability policy can be another vital form of protection to have. These policies can help to protect you against individuals that suffer injuries while on your property. While you may assume that this will only be important for businesses that have heavy foot traffic, it can actually benefit almost any business due. For example, it may be possible for a vendor or major client to be injured on your property, and this policy will help to shield you from these damages.
How Much Insurance Does a Contractor Need?
Not having the right type or enough insurance for your business can result in issues and consequences. If you need contractor’s insurance talk to an insurance provider that specializes in business insurance. They can help you acquire enough insurance to cover your needs in all areas.
In the end, the amount of insurance you carry depends on the type of work you do and the size and risk you carry in completing the job. Smaller jobs may not need as much insurance as larger projects. Take the time to determine what kinds of coverage would benefit your business and what types of insurance are mandatory. When it comes to insuring your business, it is important to avoid cutting corners. Doing so could result in legal repercussions that could cost your company thousands of dollars. If you aren’t sure what kinds of coverage you will need, consider speaking with an insurance provider that can point you in the right direction.