As the owner of a plumbing or drain cleaning company, your business is exposed to common workplace risks, as well as unique risks on each project. These risks highlight the importance of having specific contractor liability insurance.
What Is Contractor Liability Insurance?
Contractor liability insurance can help protect your business when something unexpected occurs. This includes protection for your business’s assets and employees. Contractor liability coverage offers you peace of mind in that you’ll have coverage when your business faces a lawsuit or covered loss. This means it’s important to understand the best types of insurance coverage for contractors. The right coverage ensures you can protect your business and your employees.
Business Owner’s Policy for Contractors
Most contracting businesses have a Business Owner’s Policy (BOP). They have this because it helps protect them in the same way a homeowner’s policy helps protect your home and personal possessions.
By combining three basic coverages, a BOP can help save you money while safeguarding what you’ve worked hard to build. These coverages include:
- General Liability Insurance – helps protect your contracting business from lawsuits resulting from injuries or property damage. For example, say a customer is injured at your workplace. General liability insurance can help cover the costs associated with bodily injury claims. This coverage also helps cover claims of slander and libel. Business liability insurance does not cover liabilities resulting out of the professional services you may provide. For claims of errors or omissions in services you provide, you’d need professional liability insurance.
- Commercial Property Insurance – helps protect the place where you do business and the things you use to conduct business. This can include tools and equipment. It doesn’t matter if they’re owned or leased.
- Business Income Insurance – helps cover the loss of income when you can’t run your business because of covered property damage.
Optional Contractor Insurance Coverages to a BOP
Business Income Extension for Off-Premises Operations
Business income insurance extension for off-premises operations may help replace lost income if you must suspend your operation. In some cases, business owners suspend their operation if property or equipment gets damaged on the job. For example, say an essential tool gets damaged at a job site. You may not be able to work until it’s replaced. This coverage from The Hartford may help replace the income your business loses while you are unable to operate.
The tools and equipment you use as a contractor are vital to your business. Imagine the impact on your business if the tools or equipment you use every day gets lost, damaged, or stolen. A range of coverage options are available can help pay for the replacement or repair of all types. It doesn’t matter if they’re owned, borrowed, or leased tools and equipment.
Say your company is using a bulldozer at a job site. While operating the bulldozer, one of your employees accidentally collides with a tree. Inland marine coverage can help cover the costs to repair the damage.
Say your contracting business is remodeling a bathroom and your customer chooses an expensive tub. While carrying the tub to the second floor, one of your employees drops it. This results in a large crack down the center of the tub. This coverage can help cover the costs associated with the claim against you.
Data Breach Coverage
General contractors and contracting businesses often store sensitive information about their employees and clients. This information includes Social Security numbers, debit or credit card numbers and other personally identifiable information.
If this information gets lost or stolen, it could leave your business vulnerable to lawsuits. It can also leave your business with a damaged reputation. Data Breach Coverage can help pay the costs of:
- Notifying affected individuals
- Managing public relations
- Good faith advertising
Employment Practices Liability Insurance
Contracting businesses are vulnerable to employment practices liability claims. Current and former employees may take legal action against your contracting business. They may do this for issues such as:
- Wrongful termination
For example, say you end up facing costly legal fees when a former employee claimed your business wrongfully terminated him. The former employee claimed he got terminated even though a medical accommodation may have been made for a personal injury he received on the job. In this case, employment practices liability insurance can help cover legal expenses associated.
How Much Does Contractors Insurance Cost?
Contractors’ insurance cost is determined by the specific trade you need to be covered.
For example, say you’re a plumber and need to install a new hot water heater. After you complete the job you receive a notice that the customer has scalded themselves. As a result, they sought out medical attention and they’re holding you responsible. Because of the faulty thermistor control, you’re going to have to cover the medical costs and more.
Beyond the specific trade, you’ll find common variables weigh into the total insurance cost, such as:
- Vehicles operated
- Claims history
- General coverage needs
- Number of employees
So how much is contractor insurance for your business? The only way to find out is by contacting an insurance agent who can help take the guesswork out of selecting the right coverage for your business.
This article is provided by The Hartford, a leader in property and casualty insurance, group benefits and mutual funds. The Hartford offers specialized insurance solutions for larger and small construction firms.