What is General Liability Insurance for Contractors? What does it do and how does it protect your business?
The first type of insurance most contractors buy when they start their business is General Liability insurance. As your business grows, so does your insurance premiums. But what does the policy actually cover?
Whether you’re starting your business today or you’ve been in business for years and want to know what you’re covered for – that’s what we’ll cover today.
General Liability Insurance for Contractors – The Basics
General Liability insurance protects you from the Bodily Injury and Property Damage to others that you may be legally responsible for. Let’s break this down.
Bodily Injury
This is when someone gets hurt and the expenses that follow it. Expenses can include medical costs, lost income from being unable to work, and pain & suffering.
Property Damage
This is when someone’s property is damaged or destroyed. Paint spills on carpeting or furniture. A fire starts in an electrical panel and burns down your customer’s home. What you’re liable for is the cost to make the your customer financially whole.
To Others
Coverage only applies if someone others than an “Insured” is affected. For example, if you, your employee, or a subcontractor are injured, General Liability coverage doesn’t apply.
To be clear, coverage doesn’t apply the same way in all instances. Insurance policies from different insurance carriers, or even policies from the same carrier to different businesses, can apply in different ways.
Are All Policies the Same?
No. There are standard forms used by different companies; however, many companies use their own propriety coverage forms to amend the language used on insurance polices.
And make no mistake – insurance policies are legal contracts and the difference in only a few words can matter in determining whether your covered or not.
An insurance broker that specializes in your industry can tell you the differences between coverage forms and why they matter. For example – if you sign a contract assuming the liability of another party, does your insurance policy extend your coverage as well, or did you just take on a significant risk to your business without knowing it?
What’s the Risk?
Humans make mistakes. Most accidents and injuries happen because of unsafe acts or behaviors. The simple fact is that humans are prone to error.
Maybe you’re a sole proprietor with no employees. In this case, you retain much control. You’re not as likely to make a mistake or act unsafely as a new employee with little training might. So your risk is limited, but it still exists.
The less control you have, the more likely an accident is to occur. When that accident occurs, the difference between staying in business and looking for work maybe the insurance coverage you have.
What Else Should You Consider?
Some important parts that should be added to most general liability insurance policies for contractors include:
Care, Custody, & Control
If property is damaged at your customer’s home or business, it might not be covered without this endorsement. An example of where this applies is if you accidentally damage expensive electronic equipment while moving it away from your work area.
Additional Insured & Waiver of Subrogation Endorsements
You may enter into contracts what require some version of these endorsements. We can help you review your contract to make sure you’re staying compliant and your insurance policy will actually cover you for what you’re agreeing to.
How is the Policy Rated?
Is the policy rated on payroll, sales, number of employees, or something else? Is it subject to audit? In other words, can you be charged additional premiums after your policy expires?
In Short
General Liability Insurance for Contractors is a complicated thing. We’ll help you protect your business – and all the work you’ve put into it – by giving you the tools you need to make an educated financial decision.
Ready to review your coverage and make sure your business is protect? Call us at 610-671-3500 or book an appointment here: