Finding the right balance between good coverage and reasonable premiums can be tricky. As a contractor, your career involves a certain amount of risk. That’s why it’s so important to have adequate insurance coverage.
How much contractors insurance do you need to protect yourself and your business? Let’s explore the different kinds of insurance you can and should purchase to protect yourself as a contractor.
Choosing Contractors Insurance
At a minimum, you need a contractor’s professional liability insurance policy to protect you against the most common risks, like:
- Property damage due to accident or negligence
- Injury or death
- Damages due to errors and omissions
- Costly delays
- Defect claims
Liability insurance for contractors is often required before you can take a job, and even if it’s not a job requirement, it’s the most important insurance you should have. One lawsuit over an injury or mistake can shutter your business if you’re not properly covered.
Contractors in lower risk professions such as plumbing may not need much additional coverage. Company vehicles should be covered with a commercial auto insurance policy, and you’d be wise to insure the tools of your trade in case of damage or loss, of course. Depending on the size of your company, that might be all you need.
For contractors in the construction industry, though, we recommend additional protections.
Construction industry contractors live with a little more job site risk, so it’s a good idea to purchase builder’s risk and worker’s compensation policies. Talk with your insurance agent to make sure your liability insurance covers the risks involved in construction, too. It’s important that you’re fully covered.
It’s also a good idea to ask your insurance agent about certificates you need and additional insured status requirements, as some policies will only cover your losses if you meet the minimum standards defined in your contract.
Insurance coverage doesn’t prevent accidents from happening, but it does minimize the damage. Your insurance agent will help you assess your on-the-job risks so you can find the best possible balance between reasonable premiums and adequate protection.