It’s great to be a contractor, but the responsibilities and obligations that come with being one are just as great.
Sitting on top of the responsibilities contractors have to face is the acquisition of contractors insurance. While some may see it as an unnecessary expense, smart contractors believe quite the opposite. If a contractor is interested in protecting his company, then he would regard contractors insurance as absolutely crucial to its operation.
Why get contractors insurance?
The United States is a country where frivolous lawsuits abound. If lawsuits that make little to no sense actually get their day in court, then everyone should be wary of cases that involve serious injuries and damages, among other things. And for a contractor, property damage and personal injuries are always a distinct possibility in the workplace. Contractors insurance is there to shield them from such lawsuits and claims, and that’s why it’s imperative for every contractor to get the right insurance.
To be clear, there are many types of contractors insurance available today. For the purposes of this article, let’s put a spotlight on general liability insurance, the most common and most important insurance policy for contractors.
A general liability insurance policy typically covers:
Third-party injuries - When a third party gets hurt at the worksite because of an accident caused—unintentionally or otherwise—by any of your crew, whatever medical attention the injured party will need will be charged to you.
Considering the cost of health care these days, personal injury claims could go as high as five figures. If you don’t have liability insurance, then you will have to pay for your liabilities out of pocket, which will undoubtedly put a huge dent on your finances. But if you have standard general liability insurance, then it should cover—depending on your policy’s limit of course—the injured party’s hospital bills, medications, and treatment.
Property damage - Let’s say you’re a roofing contractor and one of your workers dropped a tool from the roof and broke the windshield of a car parked below.
As with personal injury, property damage caused by workers within a contractor’s work area has to be paid for by the contractor.
With general liability insurance, you won’t have to worry about the cost of replacing that car’s windshield.
Incidents with finished projects - A contractor will still be liable for a project that suddenly caves in or collapses long after he’s done with it. Should something happen to any of your past projects, you can expect the owner of that building to file claims against you. Injuries or property damage resulting from such an incident will make it worse. Thankfully, there’s liability insurance to make things better.
Legal costs - Legal battles cost money, and you’re bound to spend a lot of it when someone sues you for injuries or property damage. Your lawyer’s fees alone will take a good chunk out of your expenses. There’s also court filing fees and other costs to worry about.
If you have liability insurance, then your legal costs are covered.
Advertising injuries - Did you know that there’s such a thing as an advertising injury?
When you put the word out about your business, and someone claims your ads have caused them to lose business, you will likely find yourself at the receiving end of a lawsuit.
It doesn’t matter if your ad used a copyrighted image without permission, or it may have said not-so-nice things about the competition. Once someone sues you for advertising injuries, you better have a general liability insurance policy that covers advertising injury claims in place. Otherwise, you’ll be bleeding financially once the court decides that you have to pay for that party’s woes brought about by your advertising efforts.
Contractors enjoy a lot of perks, but they’re also vulnerable to liability lawsuits. If you’re one, then waste no time in getting the right contractors insurance. It’s the best way to protect yourself and your business.
