Builders and contractor talking on a construction site

What is Contractor Insurance & Do I Need Coverage?

Today, many skilled professionals are striking out on their own and starting a contracting business.

However, if you’re not careful, you could end up owing more than you’ll ever earn as a contractor. Accordingly, it’s important to have the right contractor insurance for your business.

Construction work is very aggressive–and dangerous. Because of the nature of the field, it’s not unheard of for construction contractors to damage property – or worse – hurt themselves.

Liability insurance protects contractors who are on the job. If something should go wrong during a job, it will also protect your assets.

A good contractor liability coverage policy will protect you financially should an accident, injury or property damage incident take place on the job.

To learn more about how contractor insurance can protect you and your business, read on.

Who Needs Contractor Insurance?

Contractors perform skilled services for people and businesses. Contractor insurance is a good idea for nearly anyone who performs professional services for other people.

Contractors work in nearly all industries. However, people most often mean construction professionals when they use the word contractor.

If you work in construction, insurance is more than something that’s nice to have. In some instances, the law requires it.

In some states, you cannot ply your trade without contractor insurance. In New Jersey, for instance, you must have a minimum of $500,000 of general liability insurance.

Also, you must have workers comp insurance if you employ workers. New Jersey law also requires painters to obtain a special license if they work with lead paint.

You may also want insurance for your equipment. For example, you can purchase insurance to cover miscellaneous tools such as wrenches or hammers. You can also buy contractor insurance coverage for heavy equipment, such as trailers and forklifts.

What Does Contractor Insurance Cover?

On work sites, you could find yourself in one of many dilemmas. For instance, you may need your insurance to cover injuries.

Injury insurance may cover unforeseen costs, such as court awards, funerals, or medical expenses. It’s essential not to confuse this kind of insurance with Workmen’s Compensation coverage. That’s a different type of insurance for employees.

Contractor insurance may also cover you for damage claims. If you accidentally damage someone’s property, for example, insurance may keep you from having to pay the cost of repairing it out of pocket. Contractor insurance may also cover the cost of interrupting someone’s business due to an accident.

In some instances, you may find yourself liable for things out of your control. For example, the court can award someone a reward for an injury that occurred because of a defect in a product you installed on their property. Contracting insurance can help you mitigate your losses.

Insurance can cover contractors and other ways. For instance, you may design products. If you create something similar to someone else’s product, insurance can protect you if that individual sues your company.

How Much Does Contractor Insurance Cost?

The cost of contracting insurance varies. Insurers calculate premium rates by assessing the risks associated with your business.

For instance, you may frequently do low-risk work. In this case, a business owner’s policy may serve your needs well, as opposed to contractor liability insurance.

Alternatively, you may work in a high-risk industry. For example, you may repair and replace roofs.

Working on roofs presents an inherent risk. If you work in this field, you’ll naturally have to pay higher insurance premiums.

Insurance can protect you from significant losses. Insurance policies are relatively inexpensive compared to what you’d pay out-of-pocket if something goes wrong. Coverage usually lasts from six months to a year.

When considering a policy for your business, it’s important to think about the work that you regularly perform. Also, for large projects, it’s a good idea to purchase a policy that’s above two to three times the estimated cost of the work that you’ll perform.

Depending on your trade, general liability insurance can cost you about $700 to $9,500 per year. Professional liability insurance can cost you from $550 to $2,000 yearly. Meanwhile, builder’s risk insurance may cost you from 1% to 4% of construction costs.

Saying Yes to Insurance: The Smart Move for Contractors

Very few business owners have enough capital to pay for accidents out of pocket–even if they’re well-established. It’s important to buy the right insurance to protect your business and your source of income.

Basic coverage–such as unemployment, workers’ compensation and property insurance–are a good place to start. However, by purchasing independent contractor’s insurance, you can make sure you’re covered completely.

There’s no way to predict when an accident will occur. You don’t want something to go wrong and then find out that your current insurance doesn’t cover you for all possibilities.

If you wait until something happens, it’s too late to buy insurance. Now is the time to protect your business and your livelihood–before the unimaginable happens.

An Insurer That’s Got You Covered

Harrah & Associates has served consumers and businesses since 1955. We understand the distinctive needs of your business. We have the experience and skill to craft a contractor insurance program to protect your business from nearly all unforeseen circumstances.

Contact a Harrah & Associates representative today to find out how easy it is to access comprehensive business insurance. Our experts are standing by and waiting to help you fulfill your insurance needs.