As a contractor, your customers are expecting you to have insurance for good reason. They trust your work but want to be protected in case something goes wrong. You should also want to protect yourself.
What is Contractor’s Insurance?
Contractor’s insurance is a package of several different types of insurance products that contractors need. It protects you from damage caused during your work, injuries to others, and more.
Contractor’s insurance applies to a variety of trades, including the following.
Are You Required to Have Contractor’s Insurance?
Your customers are free to require proof of contractor’s insurance before awarding you a job. If the work you do requires a professional license, carrying a minimum level of insurance may be a condition of your license.
Does a Subcontractor or Tradesman Working for a Contractor Need Their Own Insurance?
Anyone doing any type of contracting work needs insurance to be covered for claims arising out of their work. When you are working for another contractor, who has to buy insurance is a matter of the agreement between you and that contractor. They may provide insurance that covers you, or they may not. Keep in mind that even if they agree to provide insurance, the policy they select may not be enough for your needs, and there’s a risk of them not maintaining the policy. You may wish to carry your own coverage to guarantee that you have what you need without relying on third parties.
What Type of Insurance Do Contractors Need?
Your exact needs will vary by your type of work and what kind of customers you have. Here are some of the common coverages.
General Liability Insurance
General liability insurance or commercial general liability insurance covers you against several different types of liability.
- Bodily injury such as when someone gets hurt in your work zone or by an object you drop while working above.
- Property damage such as denting a nearby car or starting a fire.
- Other torts such as an employee slandering a customer.
- Financial claims such as lost income by a business customer or additional expenses incurred because damage caused by an error in your work left them unable to use their premises to its full potential.
Professional Liability Insurance
Professional liability insurance protects against mistakes and judgment errors in your skilled work. For example, you may design a kitchen cabinet without enough support leading it to collapse after installation and injuring someone.
Commercial Auto Insurance
Commercial auto insurance works almost the same as your personal car insurance, but you need to have it to cover your business activities even if you’re using a truck that is also your personal vehicle. Personal auto insurance generally excludes claims during business activities.
- Collision and comprehensive protects your vehicle itself from accidents and other damage.
- Bodily injury liability covers medical bills and consequential expenses if you injure someone else in an accident.
- Property damage liability if you damage someone else’s car in an accident or back into something while moving around your job site.
Workers’ compensation pays for your employees’ medical bills, lost wages, and related expenses if they get hurt on the job. If you have employees in Wisconsin, you’re generally required to carry workers’ compensation insurance by law.
Lost income protects your business from losing income when you’re unable to perform your work due to a covered cause. This may include things like a natural disaster forcing you to close or a fire destroying your tools. These policies are very specific in what they cover and vary widely, so it’s important to understand what you’re getting.
Data Breach Liability
Identity thieves are increasingly targeting contractors and other businesses beyond financial institutions to try to steal customer data. If the information you collect from customers for billing or other purposes is stolen and used in identity theft, you could be liable for failing to protect it. Data breach liability coverage protects you from this type of claim.
How Much Does Contractor’s Insurance Cost?
The cost of contractor’s insurance depends on a number of factors.
- What type of work do you do? For example, electrical work is generally more dangerous than painting and costs more to insure as a result.
- Do you have business or residential customers? Business customers add liability because you may be responsible for their lost income if your mistake causes them to lose sales.
- What is the value of the property you’re working on? Doing work on more expensive homes or other buildings also means higher potential liability.
- How much work do you do? The higher your volume, the more chances you have of having an accident.
- How many employees do you have? Having more employees means both more activity that could lead to accidents and also more people who may not be as careful as the business owner.
What is an Additional Insured?
An additional insured adds another person to your insurance policy such as your customer or the primary contractor. This is an extra step from simply providing a certificate of insurance. The benefit is that it makes it easier for them to file a claim if something happens and also better clarifies what coverage would apply to them. Requests to be named as an additional insured are especially common when you’re working with larger businesses. You can generally easily add an additional insured often at no additional cost.
Learn More About Contractor’s Insurance
To learn more about contractor’s insurance and what type of coverage you need, talk to your independent insurance agent. If you’re near Shawano or Brodhead, Sagen & Associates Insurance is here to help. Contact us now to start your quote.