Contractor jobs come with several risks, including injuries and property damage. Having proper life insurance coverage shields you from lawsuits filed by clients against your business. General contractor liability insurance is tailored to general contractors who hold the responsibilities for work safety, materials, and equipment used for a contractor job.
General contractor liability insurance is a type of insurance that has customizable coverage for general contractors. It shields the contractor businesses against expensive claims, which include property damage and injuries from your company to others. In addition, this insurance is the foundation of risk management for most small and large businesses against claims to your business.
How Does it Work?
Meanwhile, General liability insurance for general contractors works like other liability insurance. The policyholder pays premiums to the insurance provider in exchange for protection over financial risks that may affect the business.
Just like other types of insurance, general contractor liability insurance policies consist of coverage, premiums, policy limits, and deductibles.
What General Contractor Liability Insurance Covers
Just as the name implies, general contractor liability insurance covers a variety of claims made against contractors. It covers the following situations caused to others by your business:
Bodily Injury
When a client sustains bodily injuries from your business, they can decide to file a lawsuit against your business. General liability insurance offers coverage against court bills and legal settlements up to your policy limit.
Personal and Advertising Injury
Meanwhile, you may unintendedly hurt someone else’s business through libel, advertising, or slander. Your general liability insurance policy will cover payment for damages caused by your business to others.
Property Damage
You may unintendedly cause damage to a client’s property while carrying out your job. Your insurance coverage will pay for repairs and replacements of the damages made.
For each of these cases, your general liability coverage will pay legal fees and court fees if your business is sued, as well as other settlements up to the policy’s limits.
What General Contractor Liability Insurance Does Not Cover?
While this insurance offers coverage for a lot of things, there are some cases where it does not offer coverage. These situations include:
- Deliberate damage.
- Worker’s compensation coverage.
- Omissions and errors.
- Contractual liabilities.
- Pollution.
- Personal property damage.
Aside from these, several other situations are not covered by this insurance. Even some covered situations come with exclusions, making it important to check your policy for what is and is not covered. Ensure to confirm your contractor job is properly covered by your insurance provider.
Do General Contractors Need Liability Insurance?
Yes, general contractors do need liability insurance coverage. They manage costly construction projects and supervise different types of contractor jobs. Also, they often have subcontractors who work for them, causing them to be exposed to several liabilities. In most states, general liability insurance is mandatory for all contractors to have. This coverage is required by banks and other construction clients to provide proof of this coverage before a project is proceeding with.
Are subcontractors Covered by General Contractor Liability Insurance?
General contractor insurance generally doesn’t include subcontractors because they are temporary employees. Because of this, your liability insurance may not cover damages or harms caused to your client by a subcontractor. While we have this, there are several ways to address these gaps.
These subcontractors need personal liability insurance coverage. This is to ensure that every worker is covered as well as the job site, even if they are not personally covered. Another option is to confirm whether you can expand your insurance coverage to your subcontractors. Including temporary employees in your policy increases your premiums.
How Much Does General Contractor Liability Insurance Cost?
General contractor liability insurance has no specific cost. Depending on several factors, this insurance cost is determined. Aside from the type of insurance company, other factors considered for this insurance cost include type of coverage, claims history, and number of employees.
The level of risks these factors pose will be used to evaluate how much you will pay for coverage. General contractors and other professionals who need general liability insurance often face higher premiums due to the level of risk their jobs pose, while other contractor professions get lower insurance rates.
Other types of insurance contractors need
As previously stated, general liability insurance is the foundation for risk management in contractor jobs, but there are other types of coverage contractors need. These types of insurance include:
- Firstly, professional liability insurance.
- Subcontractor default insurance.
- Also, workers’ compensation insurance.
- Builder’s risk insurance.
- Lastly, inland marine insurance.
Having this coverage as a contractor helps you get over several risks connected to financial losses, including natural disasters, property damage, bodily injuries, and property damage.