Must-Have Types of Insurance for General Contractors

General contractors provide great services for their clients. They handle repairs, reconstructions, new builds, and any number of construction related services. Because of the nature of what they do, there are many risks, both physical and financial, involved in that type of business. If you own a general contracting business, you need to make sure that you have insurance to protect everyone and everything you come into contact with. 

The danger of not having insurance is that your business could suffer irreparable financial damage. Having to pay to repair properly, cover medical bills, fix mistakes, and more, can cost thousands of dollars. You may never need insurance, but it’s much easier to rest your head at night knowing that it’s there to protect you and your business. Here are some must-have types of insurance for general contractors. 

Workers Compensation

As a general contractor, there’s no doubt that safety is a big part of your profession. Working on job sites comes with a significant amount of risk. You can certainly minimize those risks by having a strong safety compliance regime within your business. However, try as you might, you can’t prevent anything. Plus, mistakes can happen. Construction workers make up 1 in every 5 worker deaths in the United States, despite only being 6% of the workforce. General contractor employees can get injured, and because of the nature of the business, many of those injuries are serious. 

That’s why workers compensation is so important. When a worker is injured on the job, it is inherently a result of trying to help your business. Therefore, they should not be responsible for their medical bills and the wages they will lose by missing work. Instead of paying for those costs out of your pocket, workers compensation will provide the compensation. That way your business won’t lose assets, and your employee can focus on recovering instead of stressing about bills. Workers compensation is also a legal requirement in most states, so you may not have a choice. 

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General Liability

As a general contractor, you probably come into contact with a lot of people and their property. You go to their homes for work, or they visit your workshop to check on your progress. During these interactions, there is always a chance that they might get injured or have their property damaged. For example, they might trip paint cans why you are painting their bathroom, or one of your employees could damage their house with heavy equipment. In any of these situations, they may choose to sue you. 

Unfortunately, it doesn’t take any proof or even guilt for someone to sue you. Even if you and your employees did nothing wrong, you may still have to defend yourself. That will involve legal and defense costs that can add up to a significant amount over time. If you do not have insurance, then you will have to pay for them out of your business or even personal assets. Plus, at the end you will be responsible for any awards made against you. General liability insurance will help protect you from those costs by providing you with compensation for them. 

Errors and Omissions

As a service provider, you also open yourself up to risks by making mistakes or missing deadlines. Any time a client feels that you have not adequately delivered a service that they have suffered a loss because of it, they could bring legal action against you. Errors and omissions (E&O) coverage is one of the most important options for general contractors when it comes to insurance. The fact is, mistakes and unexpected events happen, and they can leave you or your clients in significant financial difficulty. 

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For instance, let’s say that a hotel hired you to renovate their ballroom. They want it finished in time for a large fundraising dinner where many famous people will attend, and there will be a lot of media attention. As an employee is installing the wiring, they realize they made a mistake and have to essentially start over. This causes a major delay, and the project will no longer be complete on time. As a result, the event is moved to another venue. The hotel could then sue you for not completing your service in the agreed upon time frame and causing them a significant financial loss. E&O coverage will compensate you for your legal costs and any damages awarded to the complainant. 

Commercial Automobile Insurance

General contractors need to use vehicles for their work. It might be for hauling equipment and materials, or it could be to actually do the job, such as with loaders and snow removal machines Whatever the purpose, you must have insurance that will cover not just accidents and collisions, but other risky events too. You could cause damage to property or injury when unloading a vehicle, for example. Never assume that your personal policy will cover you if you use a vehicle for both home and personal use. You are covered to drive to and from work, but most likely aren’t if you are moving equipment or driving between job sites during the workday. 

Commercial Property Insurance

General contractors tend to have expensive property. It could be the tools that you use, the machinery at your shop, or the equipment that you need to get the job done. All of these things would be very costly to have to repair or replace in the event of a fire, water damage, vandalism, or natural disaster. Commercial property insurance will provide you with compensation for the repair and replacement costs of things your business owns and the property on which your business sits. That way you can get back to business as soon as possible after the unthinkable happens. 

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As you can see, as a general contractor you face many risks to your business. It is your responsibility to make sure that your business, your staff, and your clients are protected. Make the right insurance choices so that you are always covered in the event that something bad happens.