If you’re a contractor, you need to make sure you have the right insurance. It’s not just something that your clients expect. It’s something that could save your business if something ever went wrong on a job.
Who Needs Contractor’s Insurance?
No matter what type of work you do, it comes with risks. If you cause property damage or someone gets hurt, you’re responsible for paying the related damages.
Woodwork may seem like it isn’t dangerous except during active work, but your risks carry beyond the actual job. You may install a load-bearing wall that fails or have a cabinet collapse. If exposed projects, such as a deck or unfinished storage space, have sharp edges or tripping hazards, you could also be responsible for those injuries.
Everyone understands the dangers of electrical work. An exposed wire can create a hazard of an electrical shock. Poorly designed or installed circuits can create a fire hazard or damage expensive electronics or appliances.
Much of the risk of HVAC work comes from the related electrical work. Even if an electrician runs the lines, you still need to make sure everything is connected properly. If there’s a problem inside of the system itself, that can create an additional fire hazard. Finally, if you install a gas system, there’s also a risk of carbon monoxide leaks or gas explosions.
You’ve probably seen the results of a flood that you’ve been sent to repair. If that type of damage happened as a result of a mistake in your work, you would be responsible for all of the repair costs, not just fixing the plumbing. In addition to the direct property damage, there’s also a risk of being responsible for injuries if a leak causes slippery conditions.
Other Related Building Trades
If you’re in another type of business, you probably have similar risks to the above. All contractors also have general risks such as a customer or other person getting hurt on a job site, dropping something on someone while working overhead, or causing property damage to your customer or a neighbor. Even when you’re careful, accidents happen, and the results can be expensive.
What Kind of Coverages Does a Contractor Need?
If you’re a contractor, you will probably need to select several coverages to be covered against all of your risks. Here are some of the common options.
Commercial General Liability
Commercial general liability is the primary coverage most contractors need. It covers most of the risks discussed above. When you injure someone or cause property damage, and they can sue you, commercial general liability insurance is what comes to your defense and pays out valid claims.
If your trade is one where you give specialized advice or use highly specialized skills, you may need professional liability. Professional liability is similar to general liability, but it covers claims related to specialized work that general liability may exclude. For example, an electrician who designs a custom electrical circuit for high-voltage business equipment may need professional liability coverage for any claims arising out of whether the design was right for the job.
Your standard liability policies don’t cover auto claims. This includes both accidents on the road and if you hit something or someone while moving around your job site. Auto claims are a separate kind of coverage. In addition to liability, you can also add protection for your vehicles so that you can repair or replace them if you get in an accident, have hail damage, or someone steals them.
If you have employees, you almost certainly must buy workers compensation insurance under Wisconsin law. Workers compensation protects them if they get hurt on the job. It also protects you from having to pay their lost wages, medical bills, and related expenses since workers compensation will cover those things.
No matter how carefully you hire, you can never be 100% certain that an employee will never steal. Whether it’s customer payments or personal property, employee dishonesty coverage can help you reimburse those customers.
If you need to post a performance bond, surety bond, or some other type of bond, laying out the cash isn’t your only option. Most insurance companies provide an option to post the bond for you at a fee of only a fraction of the bond amount so that you can preserve your cash flow.
Are Subcontractors Covered?
It’s possible to get coverage for what your subcontractors do, but you need to make sure this option is available in the policy you’re considering. It’s also possible for contractors and subcontractors to agree to who needs to get what insurance in their own contracts with each other as long as all parties are properly included in the insurance policy. However, when you’re relying on someone else’s insurance, there’s always a risk they don’t get the right coverage, don’t pay, or otherwise invalidate the coverage through no fault of your own. You may want to consider carrying your own coverage to make sure you’re protected.
Work with an Insurance Agent
Contractor’s insurance can be complicated with all the options available, and you want to make sure you’re getting the best price for your business. Your independent insurance agent is here to help. Contact Strobel Insurance to request more information or a custom quote.