Why Contractors General Liability Insurance Important?
It protects the home or business owners from potential losses to you, your employees and any other person from a loss. most homeowners and business owners require a contractor to have their own contractor’s general liability insurance before they can begin work on their property. This is because anytime someone gets hurt on a property because of the home or business owner’s negligence or carelessness, they are held legally responsible. An owner can also be held responsible if someone working on their property injures someone else or causes damage to someone else’s property. While a typical homeowner’s policy includes some form liability insurance, certain losses may not be covered and some homeowners may not be required to have homeowner’s insurance.
Liability insurance is defined as an insurance policy that offers protection against third-party claims of property damage, injury or bodily harm, loss of life or limb, or negligence. Contractors General liability insurance offers coverage that includes both “public” and “product” liability, meaning that coverage extends to direct or indirect actions of the insured (and the insured’s employees) which result in loss or damages.
What happens if a contractor causes Property Damage?
Well, let’s look at this from the homeowners point of view. If my property gets damaged due to the contractor; accidently breaking something, making a repair that fails resulting in your house being damaged? If they are uninsured, and cannot afford to pay couple dollars a day for insurance, do you really expect them to pay for or be able to pay for the repairs? Would that be the contractor you would want to hire? Probably not. Insurance is the transfer of risk and when someone is working on your property there is a risk that they could damage your property. Lastly as a professional contractor, wouldn’t you expect to pay for the damages caused by you or your employees if you were liable for the damages?
What if someone gets hurt?
If you or your employees get injured on the job this is covered by worker’s compensation insurance policy. If someone else was to get injured on the property this could be the contractor’s legal responsibility and without the property insurance in force may be the difference between be able to continue to work and going financially bankrupt. This may also apply to the property owner if they hired a non-licensed or uninsured contractor.
Ok, So what does contractors liability cost?
Generally, the price is assigned based on an individual basis based on the trade or industry you are in, your projected sales or payroll amounts, the number of subcontractors you use. The insurance companies usually based on their insurance policy contracts allow them to audit the company up to three years. So, if you figure out that you will do 2x the projected amount that your insurance amount will go up accordingly once the audit is completed. Most startup companies with $100K in estimated gross receipts average from around $50/mo. Up to $200/mo. Depending on the trade and receipts.
Insurance is rarely a priority during a home repair or remodeling. However, as contractors you know or should know that accidents can and do happen, which can occasionally lead to lawsuits. In today’s litigation crazy world I cannot think of any professional contractor or any other professional business or organization that would argue that having insurance is not necessary (a necessary evil maybe, but still necessary). The reason why is simple, it is a business obligation to protect its assets, its employees and its customers. One of the first questions the homeowners and customers should ask is are you Insured? And we make it very simple to say yes.