What Insurance Coverages do Contractors Need?

December 27, 2021

When you work as a contractor, situations of employee injury, equipment malfunction, theft of materials or property damage present serious liabilities to your company. Whether you are employed directly by a company to complete a job or you are subcontracted by another, you will are likely required to have contractors insurance before being awarded a contract or being licensed by construction or licensing boards. Despite performing similar activities, contractor policies vary according to the nature of the business and work performed.

What Kind of Insurance Does a Contractor Need?

There are several categories of coverage that the typical contractor would need. Within each of these areas are more specific policies that can be purchased to address the liabilities of your specific company. These categories are

  • Contactor Essentials
  • Recommended Coverage
  • Large Projects

By looking at the scope of your operations, such as how many employees you have, who you typically do business with and the value of your equipment and assets, you can determine the priority purchases for insurance.

What Type of Insurance Coverage Is Traditionally Used By Contractors?

While you may have determined the coverages that are most useful for your company, there may be required coverages to purchase. Some of these come from government laws while others may be required by contracts. These are some of the more common, specific policies contractors carry for comprehensive protection.

  1. Contractors General Liability: With this policy, coverage goes into effect when claims are made for damages caused to a third party. This is broad coverage to address the risks of your operations while on the job site.
  2. Products and Completed Operations: Allowances for this coverage are similar to a product warranty, as it goes into effect when the claim comes concerning your work but after the project is finished. Claims of this nature are typically excluded from a general liability policy.
  3. Workers Compensation: This coverage is generally required by law if you meet the threshold for a certain number of employees. This coverage takes care of employee injuries that occur while on the job. It’s one of the more expensive coverages but also one of the most practical and protective.
  4. Contractors Errors and Omissions: If you regularly hire subcontractors for your jobs, this policy protects you from mistakes or damages they cause. You can be held liable if the subcontractor does work improperly, but this policy takes care of errors and omissions on your behalf.
  5. Commercial Auto: If you have a commercial fleet, contractors need special insurance for their vehicles. Personal insurance doesn’t cover business operations. Adding hired and non-owned policy coverage will take care of vehicles that you may rent or don’t own but are used for business.

What Are Your Contractors Insurance Needs?

Knowing these exposures, you can determine which policies to purchase. Comprehensive coverages are your best legal and financial protection.

About Brooks, Todd & McNeil

Since 1839, the independent agents at Brooks, Todd & McNeil have been pleased to offer our community the best and most affordable policies from a variety of providers. Our dedicated facilitators are ready to put their 75 years of combined experience to work on your claims. To learn more about our products and services, contact us today at (800) 448-4567.