Contractor Insurance in PA : All You Need to Know
Depending on the type of work, general contractors are required to acquire specific types of business insurance. If your business is a contracting company, you need to avail of contractor insurance services in the PA area and if your business owns a vehicle, you need to avail commercial auto insurance to comply with the state requirements.
If your business has a physical location where you pay for the commercial lease, you may be required to acquire general liability coverage. Contractors in Pennsylvania commonly own it as this type of business insurance can protect the business from the liability associated with common risks such as property damage and trauma.
Another contractors insurance in Pennsylvania that every small business should provide is the workers’ compensation insurance. This type of business insurance covers lost wages and medical bills for work-related injuries.
Depending on your clients or the type of work that you have, you may need a contractors insurance or surety bonds.
How much does insurance cost for PA contractors?
The costs of contractors insurance coverage will depend on your policy limits, business risks, the value of the equipment your business uses, and other related factors. Coverage cost estimates are based on policies purchased by most companies.
General liability insurance costs for general contractors
A general contractor pays a median premium of $90 per month or $1,090 annually for general liability insurance. This policy coverage protects your business against third-party injuries, property damage, and advertising damages. General contractors are able to save money by acquiring general liability insurance with commercial property insurance.
The median cost per year: $1,090
Policy limit: $1 million per occurrence
Policy deductible: $500
Workers’ compensation insurance costs for general contractors
For the worker’s compensation insurance, general contractors pay $265 per month or $3,175 per year. This business insurance is required by most states including PA for businesses and employee benefits to cover their medical fees and lost salaries due to occupation-related injuries.
Contractor’s tools and equipment insurance costs for general contractors
The median premium for general contractors insurance is about $15 per month or $170 per year for contractor’s tools and equipment insurance. This business insurance policy covers the repair or replacement of lost, stolen, or broken devices and equipment.
The median cost per year: $170
Generic policy limit: $5,000
Professional liability insurance costs for general contractors
General contractors insurance median premium is a maximum of $45 per month or $520 annually for professional liability insurance. This form is known as errors and omissions insurance to protect against client lawsuit claims on unsatisfactory, negligence, late, or unfinished work.
The median cost per year: $520
Policy limit: $300,000 per occurrence
Make sure the contractor is licensed
All contractor ads, of any form, should state the contractor’s state license number. You can expect that all builders are competent, honest, diligent, and financially responsible. However, most problems can be avoided if the homeowners are aware of their home improvement rights and are more accountable for their project. As knowledgeable consumers, they can help them work effectively with competent builders and prevent being victims of unlicensed operators.
Shop around before hiring a contractor
Try to collect three written bids. Compare these bids based on identical plans, specifications, and scope of work. Don’t just accept the lowest bid. Instead, it would be best if you were more careful of the lower bid compared to others. Comparing will enable you to see if a mistake or work quote was mistakenly not included. It may lead to some issues later with your contractor if you accept an unusually low bid. In this case, builders may do substandard work or materials to make a profit.
Please take note that contractors are required to state their license number on their business card. However, seeing a license number doesn’t mean the license is valid. Since even the bid is low, the possible financial and legal consequences can outweigh any benefits a lower bid could offer.
Ask for personal recommendations
If you have friends or family who have recently dealt with a contracting project and is satisfied with the result, you can ask them to help you out with your project, especially working with the builders. Local customers, material supplies, subcontractors are good reference sources to know if they are financially responsible. If you are still not confident, you may check the contractor out with your local building department and other building-related agencies to verify their credibility.
Do Independent Contractors Need Liability Insurance?
It is important that you have the right insurance for contractor. You can get sued immediately like other small business owners, and liability claims can be pricey. If you are not covered, and a client sues you, you will have to pay out of your pocket. And that may cost enough to close your business.
An independent contractor liability insurance is provided to help your business from specific liability claims.
How Much Is Liability Insurance for an Independent Contractor?
The cost of liability insurance coverage for independent contractors is not fixed. It can depend on your:
- Risk exposure
- Business location
- Policy information, i.e., your insurance coverage limits and deductible amount
Since there is no one-size-fits-all liability insurance for independent contractors, it is best to work with a local insurance company or ask quotes from different insurers.
What kind of insurance do general contractors need?
Owning a contracting business comes with risks. There are many possibilities for people to incur injuries or for properties to sustain damage. Physical injury or property damage happens in the work area, and the contractor will be receiving the end of a claim, where they have to pay out of their pocket. But this will not happen if they have the proper coverage that protects a business against certain liabilities.
Here are some types of contractor insurances:
1. Commercial General Liability Insurance
Commercial general liability coverage is one of the most common types of insurance for contractors. It covers claims for physical injury or property destruction that happen on a job site. Aside from covering the compensation, it also covers the legal expenses spent during litigation.
2. Workers Compensation Insurance
Workers’ compensation insurance cover employees from work-related accidents. Among the expenses covered by this business, insurance are medical treatment, disability income, rehabilitation costs, and compensation to the families in case of deaths. Worker’s compensation is a necessary protection against third party suits filed by the employees or their families.
3. Contractors Pollution Insurance
Due to strict environmental laws, especially the risk of pollution, builders are vulnerable to getting sued for violation of environmental laws whenever there is a builders project. Contractors insurance protects builders from such claims.
4. Automobile Liability Insurance
The owner of the vehicles used to transport materials, equipment, and workers to the construction is liable to compensate the employee or their families in case of damage in the property, injuries, or death at the construction site that may have been caused by the vehicle. Auto liability insurance protects builders against such claims.
5. Commercial auto insurance
A commercial auto insurance policy coverage protects vehicles owned by a general contracting company. It protects property damage and covers medical bills in case of an accident, vehicle theft, weather incurred damage and vandalism.
6. Builders Risk Insurance
Materials and equipment can be lost, stolen, or damaged in a particular construction project. Hence, builders’ risk insurance is provided to protect the builders from these possible losses. It is provided along with general liability insurance coverage.
7. Roofers Insurance
Roofers insurance is a type of general liability insurance that protects roofing contractors in case of workplace accidents that could lead to physical injury of the workers or damage on the property. Since the roofer’s work is way high above the ground, the risk of accidents is higher.
These are some types of insurance a contracting business should get and consider to keep themselves protected. As a contractor, instead of thinking of paying your premiums, you should take into account the possibility of closing down your business if employees file for claims when a mishap occurs in the workplace.
As you know, the types of insurances for contractors you should have, do not wait until an accident happens. Ask an insurance professional to help you acquire the right coverage for your contracting business to be sure enough that you are appropriately covered and that in case of claims, you have complied with Pennsylvania’s contractors insurance requirements.
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