Contractors Insurance

What You Need to Know About Getting Contractors Insurance in 2022

Contractors have many occupations. They are responsible for supplying equipment, labor, and services at the client’s premises. Contractors are also responsible for coordinating the project, which often includes assessing project documents and determining the site for renovation projects. Interior decorators, carpenters, plumbers, electricians, and roofers are just some of the contractors people hire these days.

A contractor drawing a project he is working on.

Because they use so many different tools on regular basis, contractors need the right coverage for the equipment they keep carrying around for business purposes. One of the most cost-effective ways to get property and liability coverage for contractors is to buy a Business Owners Policy (BOP) that is crafted according to their needs. 

Because every business has specific needs, commercial contractor insurance can range from standard contractor insurance policy to a more detailed mix of coverages. The type of contracting business you own, its size and location are some of the most common factors that affect the type of contractor insurance coverage you may need. Here’s what you need to know before you make a decision.

Contractor Property Insurance

The BOP policy is useful as it offers coverage for real estate and other properties that your business owns. If you rent or lease, the BOP covers the tenant’s improvements, including: 

  • Fixtures
  • Alterations
  • Installations
  • Additions that can’t be legally removed from the premises

When it comes to the biggest risks of personal property loss, contractors face losing valuable equipment and machinery that is not covered by the standard property insurance and that they move around from job to job. This type of property can be insured by contracts called “floaters.” 

Floaters cover various types of machinery and equipment during installation and transit. Usually, this type of coverage is provided for machinery that contractors install, such as heating and air conditioning but it can also cover other items wherever they are used, such as hand tools and power drills. 

Contractor Liability Insurance

Given the possibility of a lawsuit should someone claim to have been harmed by your work, you will almost certainly need liability insurance for contractors. Contractors insurance is usually a bundle of insurance policies that cover your business in case someone files a claim against you.

In most cases, contractors need business vehicle and workers compensation insurance. You might need other types of coverage depending on the size of your company and what type of work you do. 

If you are a subcontractor, your clients may require you to carry Owners and Contractors Protective Liability coverage or OCP. OCP covers a business owner or a general contractor from possible liabilities that may arise from the negligence acts. 

Business Vehicle Insurance For Contractors

Personal vehicle coverage doesn’t provide coverage for vehicles that are used for business purposes. If you own a truck and drive it for business purposes, you must have a business auto policy to cover you in case you get in an accident. 

If you don’t have business vehicle insurance and your personal auto policy doesn’t have enough coverage to pay all the damages, a lawsuit may be filed against your business. Therefore, it is recommended to discuss your specific business needs with an experienced insurance specialist

Contractors Workers Compensation Insurance

If your business has three or more employees, you may be required to carry workers compensation insurance. These requirements vary from state to state, so it might be a good idea to check with your state department whether your state requires you to purchase workers comp insurance. 

This type of commercial contractor insurance policy covers the employees of a company in case they are injured while working. Often, this is the most expensive part of insuring your business. 

Does a Subcontractor Need Insurance?

Having business insurance is always a good idea, even if the law doesn’t require it from you. Every business should protect its services, goods, and workforce, even if they are just starting out. And that includes subcontractors too. It would be best to keep in mind that insurance can help you land more significant projects. After all, many contractors require insurance if you are going to work for them. 

How Much Does Contractors Insurance Cost?

One of the factors that affect contractor liability insurance cost is the type of work that’s involved in your specific business. For example, a carpenter and a mason aren’t exposed to the same risks while working on-site. That’s why you can expect different rates from contractor insurance companies. Other factors that affect contractors insurance cost are vehicles, coverage needs, location, claims history, and employees. 

Another important factor that impacts your contractors insurance rate is your policy limits. Liability limits refer to the maximum amount a contractor insurance company is willing to pay for a loss.

You decide the level of limits on your policy. So if your business is considered to be low risk, you may feel comfortable choosing a lower liability limit. That means the price of your insurance policy would also be lower. 

One of the ways contractors can save money is by bundling general liability insurance with commercial property insurance. However, one of the best and most secure ways to find out more about the contractor insurance quotes that fit the needs of your business is to talk to an insurance specialist directly. 

Luckily, the price of contractors insurance is usually worth the value. To provide the scope, the average cost of someone slipping and falling on-site can amount to $20,000. If you consider that a simple rate of $35 per month could make a big difference for your business in case of an accident, then having contractors insurance makes financial sense. 

Finally, remember that you are not alone in this process. Let East Insurance Group help you choose a policy that will fit your contractors insurance needs. Protecting your assets, whether personal, business or both, is our goal. A well-chosen policy can lessen the impact of some of life’s most common yet unforeseen perils. We’re here to help when you are considering contractors insurance coverage.

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