What every general contractor should know about insurance: A blog about what insurance does for a construction business.

What is general liability insurance?

General Liability insurance is intended to protect you and your business against the financial devastation that can result from unintentional damages you may inflict upon a third party. A third party is anyone other than you and your employees. In the event of a claim, a general liability insurance policy is intended to cover both your actions as well as issues that may arise from your completed workmanship. Most importantly, it provides payment for various types of litigation costs, including lawyer’s fees, settlements, court costs, medical bills, repair fees and more.

What are the different types of insurance a construction business needs?

If you have employees, the law requires that you carry workers’ compensation insurance. But additionally, the second most important insurance that a general contractor should carry is general liability. General liability is not required by law, but it is an extremely important part of protecting your business. If you don’t carry it, major financial losses due to bodily injury, property damage, or workmanship will be expenses you are required to cover. Sole proprietorships are even at risk of losing personal property to pay for court-ordered damages.

It goes without saying that anything you construct or work on could have claims made against it even years down the road. The liability policy you had in place at the time of construction should still cover you, which is known as ‘tail coverage’. So not only do you get third party property damage and bodily injury coverage for the year you are insured, but many additional years for the policy to potentially pay out on a workmanship problem that caused a loss.

If you are a general contractor in the process of building a custom home, for example, you should also consider the purchase of builder’s risk insurance. Builders risk insurance covers your jobsite in the event of fire, theft, or vandalism. Builders risk insurance also provides coverage for materials in transit, such as the client’s cabinets that could fall off the back of your truck and be destroyed on the way to your jobsite. Inland Marine can cover your tools and equipment, while commercial auto insurance can provide coverage for you and those driving your work vehicles.

Another important consideration for contractors should be professional liability insurance for contractors. If you render a professional opinion, such as in the design element of what you build, professional liability insurance coverage would cover you for unintended omissions or errors made during that process. For that reason, professional liability insurance coverage is also referred to as ‘errors and omissions coverage’. A portion of your professional liability insurance costs can be reasonably built into the contract you enter into, and that goes for your other lines of insurance as well.

How does General Liability Insurance protect my investment?

Unintended bodily injury and property damage claims can bankrupt a small business. You can do everything right as a contractor and still get pulled into claims – it’s unavoidable. The purchase of General Liability is the transfer of risk. You purchase a policy for a premium and in exchange, the carrier agrees to take on the risk of catastrophic losses that you can’t possibly handle on your own as a business owner.

What happens when a claim is filed?

If you are in a situation where a claim has been made against your policy, the policy will cover various types of litigation costs, including lawyer’s fees, settlements, court costs, medical bills, repair fees, and more. You will have a claims adjustor assigned to you to help determine where the fault lies and whether the policy will be triggered to pay out on the type of claim in question. If the case is taken to court, you will have defense attorneys assigned to you at your insurance company’s expense to defend your side.

Why should you consider buying insurance from an insurance agent specializing in construction trades?

As agents specializing in contractors, we know what kinds of insurance you need to best protect your business. We’ve encountered many types of construction-related claims and can guide you accordingly. We also have the markets and we work for you – as an agent/broker, we search among the various carriers to locate the best coverage at the best price. We don’t work for any one insurance company. We also know all about general contractor insurance requirements. Certificates and endorsements for construction related trades is our specialty.

At Contractor Solutions Insurance Agency, Inc., we’ve developed working relationships with our carriers, which allows us to negotiate the best pricing for general liability insurance for general contractors. It is our mission to locate the best coverage for the best price. Our experienced and dedicated staff are specialists in general liability for contractors. Give us a call at (619) 741-5118 and speak with a representative today.

Please note: Depictions of policies used in this blog do not constitute a guarantee of coverage.