Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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Contractor InsuranceMake no mistake: Contractors business insurance is as much a part of the business acumen as any element affecting financial survival. Despite making every effort to anticipate the risks associated with exposure as a contractor, the unforeseen has a way of presenting situations that cannot be controlled necessarily.

It is for this reason contractors are required to purchase protection in the form of a contractor’s business insurance policy. More often than not, the requirement for contractor’s coverage is a prerequisite to being hired.

Coverage for losses beyond bodily injury and property damage must be in place in the event of errors and omissions, negligence, and much more. Avoiding potentially catastrophic loss is possible with the help of a qualified agent.

Be sure to enter your ZIP code into our FREE insurance comparison tool and let us make sure your business is properly covered!

How is Coverage Determined?

Fundamentally, commercial insurance is designed to protect the assets of a business against lawsuits that may arise from the operation of that business. The insurance company’s underwriters must take into consideration the perceived risk of a given contractor.

Inherent risks differ from site to site making it essential that the agent has a complete understanding of the nature of the work that is being performed by the contractor. In this way, the foresight put into negotiating the policy will ensure sufficient coverage to protect the business as well as the public at large.

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Where Does the Contractor Get Started?

There is a wide scope of coverage available from many providers. The package is structured as foundational coverage upon which other coverages are selected that are crucial to the particular contractor. This is where an agent’s insights will be of the most help in understanding the industry and assigning the appropriate lines of coverage to limit exposure.

While there is much competition from insurance providers online, there is more to consider than the bottom line.

Selecting a knowledgeable agent is as much a part of the process as selecting the lines of coverage. The indemnity market is there to provide the contractor with everything needed to obtain competitive quotes that will help to establish sufficient protection.

Getting no obligation quotes will initiate the dialog necessary to tailor coverage. It’s as easy as completing a secure form online that will result in a quick response from several agents ready to provide the necessary coverages. What follows are highlights of the information that will help to facilitate the discussion.

A great way to get started finding the best insurance provider, is to enter your ZIP code into our FREE insurance comparison tool!

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What is Contractors Insurance?

Contractors business insurance can be considered a hybridization of professional indemnity and public liability coverages, providing a form of malpractice insurance for the general contractor. It is intended to compensate the injured party for damages sustained as a result of acts of negligence or omissions on the part of the contractor.

In essence, liability coverage provides for the defense of a contractor whose fault, or liability, is being contested. The insurance agreement is intended to provide that the carrier will pay for an attorney to defend the insured, including all or most of the costs related to investigation and discovery.

Business Insurance Coverage

What is Covered in a Comprehensive Insurance Package?

Commercial lines insurance is structured as a shell that gets layered to the needs of the business to avoid catastrophic losses. The basic liability policy covers bodily injury and property damage, personal injury (including libel and slander), advertising injury, and products and completed operations liability.

The contractual liability layer is called Errors and Omissions coverage, or E&O, to protect against loss in the performance of professional services. Typically, a policy has limits beyond which a given risk may still have reasonable exposure. Beyond these limitations, a contractor can purchase an umbrella policy, should there be exposure to risk that may exceed the limitations of the general liability policy. However, it is important to tailor the coverage so as to avoid becoming over insured.

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Types of Contractors

Contractors business insurance extends to professionals other than just the general contractor.

 

Some other contractors could be:

  • Developers
  • Builders
  • Carpenters
  • Electricians
  • Plumbers
  • HVAC
  • Masons
  • Concrete Contractors
  • Roofers

Other Layers of Coverage

With the help of a good agent, a contractor can further tailor a liability package to consider all the relative exposures.

Among the plans from which to consider are:

  • Worker’s Compensation is a compulsory coverage intended to protect employees that are injured on the job.
  • Inland Marine Coverage – specialized contractors insurance covering the goods in transit over land. As a contractor must go to the jobs, so must the tools and equipment. These are called floaters.
  • Disability is also known as Accident and Health Protection. This covers injured workers who have been displaced from work.
  • Surety Bonds – a financial instrument that guarantees performance. This bond provides protection for a developer, for instance, who hires a contractor that cannot complete the job. It further assures compliance with building codes and acts to protects consumers as well. Some states actually require a license bond for a contractor to be able to perform the work.

Benefits and Considerations

Construction Contractor

Having sufficient coverage will allow a company to conduct business uninterrupted, even during the process of facing a charge or allegation that may be brought against them. If liability is found on the part of the insured, the insurance company pays the award amount up to the policy limits.

An agent will require some information in addition to the type of risk and the size of the workforce being employed prior to the offer of coverage. The company’s claims history will also be required to best assess the risk. Conferring with an agent is also the best way to learn what measure may be taken to further improve the business practice profile in order to obtain the best pricing.

Be sure to enter your ZIP code into our FREE insurance comparison tool and let us make sure your business is properly covered!