Do construction contractors need insurance?
Yes. If you’re providing goods or services as a contractor, and getting paid for it, then you are a business– even if you’re just a small artisan contractor or a one-man operation.
Everyone should have the right protection. If something goes wrong on the job, the right business insurance can help protect you, your assets, and your employees, if you have any.
Types of contractor insurance
Workers’ Compensation: Because a lot of your work is physical, workers’ compensation insurance is definitely something you’ll want to consider.
General Liability: General liability is also important because there are miscellaneous risks involved regarding work environments and client interactions.
Contractor liability insurance
General liability insurance is necessary for contractors because of the types of risks they face working in such a physical industry. No matter how safe and cautious you are, accidents can happen.
Liability insurance is designed to protect you from many of the common things that can happen on the job site.
GL coverage protects you against:
- Bodily injury, like if someone trips over one of your tools and sprains their ankle.
- Property damage, like if you’re repairing someone’s faucet and happen to crack their porcelain sink.
- Personal/advertising injury, which is important coverage for things like advertising your services on social media.
You might also want to consider General Liability insurance if:
- You get hired by a general contractor for a bigger project. Most general contractors require subs to have their own insurance policies (to protect themselves from any work-related issues).
- The clients you work with require you to have a certain amount of liability insurance and ask you to provide a COI before you start.
General liability insurance will give you peace of mind that you’re protected should something happen.
Workers’ compensation coverage for contractors
Workers’ compensation protects you and your employees should someone get hurt or sick on the job.
Policy benefits include:
- Reimbursement for lost wages
- Medical costs incurred due to illness or injury
- Return to work and recovery services
- Employers liability coverage, should an employee file a lawsuit
Related: Do I need workers’ comp if I have no employees?
If you’re a one-person business and you’re suddenly out of commission, not only will you have to pay all medical expenses out of pocket, but you’ll also miss out on the money you would have been making had you been at work. That’s why workers’ compensation insurance is so great. It can cover these types of costs. Read: Guide to Self-Employed Workers’ Comp
Are there any other important insurance coverages for contractors?
Yes. Here is a quick overview of other policies that benefit contractors:
- Business property: Protects commercial property from theft, fire, natural disasters, and vandalism. It can also cover loss of income in case such property damages prevent you from working in your office. Quick note: If you keep your work gear at home, don’t depend solely on your homeowners insurance to cover your work items. Typically, the policy will only cover up to $500 in business property damages.
- Inland marine: Business property insurance is great, but it typically only covers your work items within 500 feet of your business premises. If you are bringing your tools to job sites, consider this coverage– it will keep the items protected in transit.
- Business auto: A business auto policy will protect vehicles owned by your business.