General Contractors Insurance

General Contractors Insurance is an essential part of running your business. It protects you in case some unforeseen events, accidents, errors, or theft occur when you are working on the job.

Without contractors insurance, you may have to pay out of your own pocket for what can be substantial damages and legal claims against your company.

In this general guide to the types of insurance for general contractors most often required, you will be able to select the right insurance for general contractors policy for your own General Contractors business.

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General Contractors Insurance

The type of contracting business you own makes your insurance requirements different, which means you may need standard policies for commercial insurance plus a more thorough mix of solutions specifically for contractors as well as tailored to your businesses’ size and location of your operations.

To understand the risks contractors face every day and to get help in finding the proper commercial insurance solutions to help meet your varied needs, we are expanding in this article on all the different parts that you should attend to, particularly those applicable to general constractors.

For specifying small business insurance for general contractors, let’s start by saying that your own business is unique, has specific needs, and nobody knows it better than you do.

That’s why we are describing in detail all of the features of General Contracting insurance that may be necessary for you. It’s then a process for you to identify with us what parts of the portfolio of insurance coverage match your own specific requirements.

What is a General Contractor

A general contractor undertakes the construction of a specific project at the request of the property’s owner or manager. The contractor undertakes to provide the material, labor, equipment and services necessary for the job.

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Depending on the specifics, a general contractor may hire specialized subcontractors to perform specific parts of the construction work and is responsible for the quality of all work performed by all of the hires.

The contractor’s responsibilities may include obtaining all necessary building permits, securing the property, providing temporary facilities on site, managing their own and contracted personnel on-site, recycling of waste, and all associated activities.

The first thing to define is the type of contractor’s business you are operating so that the insurance companies for general contractors can be selected. In general, this falls into two broad categories:

Primary Contractors

Usually known as a prime or direct contractor, this describes a business where you have an agreement directly to perform some work for a property owner.

You and your direct employees are providing all of the services, directly to your own customers. This work is usually on a single project based on a quote for work that you have provided in response to a customer’s request.

Contractual operators

As a general contractual service provider, you may be responsible for hiring subcontractors and coordinating their work, making sure the work is being progressed in a timely fashion and on budget.

As the contractor, you could be adding several additional features to the business. On the one side, you may be tendering for a complete job by accepting a contract.

You can also act as a subcontractor supplying specific services to a third-party contractor. As well, you may become part of a consortium of contractors each one of which is agreeing to a joint contract. Frequently, this is required by licensing and construction boards.

In these cases, there may be some insurance coverages that are “required by contract”, which are mandatory for this project.

Project owners usually will only hire contractors with the insurance that protects them in terms of the specifics of the project. Share with your adviser any relevant specifics so that they give you the best possible solution.

What kinds of insurance policies do Contractors need?

All businesses operating as general contractors have special risks. You can find the right cover by enquiring from qualified sources on which companies offer the best terms and conditions that suit your specific circumstances. With the proper coverage, you will stay ahead of risk by preparing for it and ultimately are helped to reduce losses, minimize costs and keep projects running smoothly.

Our recommendations of broad, tailored coverage and enhancements are based on our deep knowledge and experience in the construction industry, and specifically designed to meet the needs of our customers.

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What is General Contractors insurance?

General business liability insurance provided by a Business Owner’s Policy (BOP) combines property and liability insurance into one business insurance policy.

While this may cover your business for some types of claims, in the case of General Contractors, it may not be sufficient to protect from claims that could arise from your business type of operation.

These include claims of bodily injury or property damage, employee injuries or intentional acts. This means your insurance must be tailored to match your operations or else you may be personally liable in the event of accident, mistake or omission.

Most importantly, choose general contractors insurance coverage that covers all aspects of your services. You may also need to extend your basic general liability insurance with umbrella coverage. This can provide an additional layer of liability protection for you.

Don’t take it for granted that your existing contractor insurance provides all of the coverage you need. Consider carefully all your needs – your must make sure that you have coverage for all aspects of your business.

Always try to share the necessary industry knowledge and understanding to be able to provide complete, flexible and innovative solutions for contractors of all sizes.

Different types of General Contractors insurance

In all cases, for both primary and contractual work, coverage for the following categories is standard:

  • General Liability
  • Workers Compensation
  • Employment Practices
  • Third-Party Liability
  • Completed Operations Insurance
  • Equipment Coverage
  • Asset Coverage (vehicles, commercial property)

In addition to the general coverage listed above, Contractual Operators may require some more extensive insurance in the following areas:

  • Umbrella Liability coverage
  • Cyber Risk coverage
  • Hired and leased vehicle and equipment coverage
  • Environmental & Contractors Professional Practice
  • Contract Surety
  • Contractors Errors & Omissions coverage

Each one of these policies is described in more detail below.

What does General Contractors insurance cover?

The extent of insurance for general contractors that you require is very much dependent on the size of your business, the number of employees, whether or not you use sub-contractors or act yourself as a subcontractor to third-party operators.

General Liability

General Liability Insurance is also known as business liability insurance, designed to protect you from a wide range of common claims such as property damage relating to your premises, personal injury and associated medical costs relating to third parties, libel, slander or defamation, and several others that can arise in the course of daily business operations.

Remember, failing to carry this insurance could lead to you having to pay personally for all the expenses related to a claim against your business.

Professional Liability

Generally, for small to medium size businesses, a $25,000 limit per claim with an annual aggregate of $50,000 should be sufficient. It’s usually possible to take a $500 deductible per claim, in order to reduce premiums. Read more here about professional liability insurance policy.

Workers Compensation

Subject to state law, the requirements for and provisions of workers comp insurance for general contractors vary, but it is required in almost every state. Check on our web pages for the relevant details for your state.

Without workers comp for general contractors, your business is at a considerable money risk. Not only can you be fined for breaking the law, but you could also face a lawsuit for workplace injuries and have to carry both the legal and the compensation costs.

If you let us help you in selecting the right cover, your business will be fully protected.

Health Insurance

Health insurance for general contractors is not part of Workers Compensation cover. As a standard business operation, you should take out adequate health cover for yourself and all your employees, but subcontractors who are working on a temporary basis are responsible for their own health and Workers Compensation insurance.

Cyber Security Insurance

All companies or workplaces must protect against cyber-security omissions. The possibility of hackers breaking into your system and accessing sensitive customer or employee information and data can expose you to legal action with substantial court and penalty costs.

As well, your own financial information can be turned over to the wrong hands, and this could ruin your business.

Contractor’s Errors & Omissions coverage

Errors and omissions insurance for general contractors is specifically intended to protect against accidental damage or faulty work on the site.

This is essential if you work on a property that belongs to a third party but is under your supervision for the duration of the project or if you build components off-site for your clients to provide coverage in case mistakes are later discovered.

Umbrella Cover

Umbrella Liability Policy insurance is designed to supplement existing cover against major unexpected events that may exceed the limits of coverage in normal policies.

It may be a requirement to have such extended cover when your company is undertaking subcontracting work or part of a larger or government project.

While standard policies help protect you from foreseen events, there may be times when losses may exceed what the regular insurance covers. Umbrella and excess liability solutions provide you with extra security in the event of an unpredictable event.

Employment Practices Liability Insurance (EPLI)

In many states, employees of a company can make claims that their legal rights have been violated. It may be possible to get this coverage as a part of the Business Owners Policy by endorsement – talk to us.

The types of claims include sexual harassment, discrimination, wrongful termination, breach of employment contract, emotional distress, mismanagement of benefit plans, and many more.

When you are talking to agents, brokers and company salesmen, put yourself in a position to find the best solution while negotiating your full package.

Third-Party Liability

Third-party liability coverage is important in case of physical injury to a private person or damage to someone else’s property.

This legal liability coverage is set up to cover legal fees, the amount of money you have to pay to settle a lawsuit and other related expenses.

Completed Operations Insurance

For events that occur away from your premises that are caused by your work, the policy provides cover in case of bodily injury and property damage.

Equipment Coverage

Contractors equipment used on-site for construction, landscaping and engineering, such as  tools and machinery, compressors, pumps, saws must be covered in case of damage or theft while on the job. Common tools include those such as other portable equipment.

Employee dishonesty

In the event of theft by an employee of customers’, subcontractors’ or third-party property, you can protect yourself against claims.

Equipment leased or rented from others

You need to protect equipment that you have rented or leased for your contracting business, such as forklifts and tractors.

In some cases, there are specific restrictions inside the rental agreement on how and where the equipment is to be used and stored, and breaching these requirements may make you liable for replacement.

Some examples of businesses that should have General Contractors insurance

Contractors who undertake constructions or repairs on Domestic, Commercial, Retail, Industrial and Institutional buildings, and properties all need insurance coverage for general contractors.

If your company subcontracts its services to other businesses in these fields, then you need the same level of coverage as you would for your own business.

Some of the more specific types of contracting businesses for which specialized policies are offered are:

Handyman – for anyone commissioned to perform domestic repairs and minor renovations.

Roofing Contractor – highly specialized policies because of the higher risks involved for injury and the medical treatment costs

Fence Installation – covering installation of temporary and permanent fences, screens, gates, and barriers on commercial, domestic, agricultural, and many other types of properties.

Solar Panel Contractor – the work itself is high-risk, and the equipment is expensive, so special policies have been developed to cover this business.

Insurance coverage for general contractors is especially important for work that is done on existing buildings, particularly residential homes and offices.

There may be cases when the building is occupied by third parties during the work, and injury to people or damage to private property can result in substantial claims.

The types of insurance general contractors require depends on their size or general operations, the number of direct employees and use of subcontractors, complexity of the work and many more.

What are the limits on coverage by General Contractors insurance?

Limits should be set based on the size, type and complexity of your own business. Private contractors without a large workforce can generally accept the minimum coverage that reputable insurance companies offer.

For contractors that are working with subcontractors, or are themselves subcontracting, the major determinant of minimum cover limits depends heavily on the total size of the project and the number of people working directly on-site.

In many such cases, the contract itself will stipulate the minimums and limits that must be covered.

The average cost of General Contractors insurance per month

In order to calculate how much is insurance for general contractors, it is necessary to take each one of the basic policies separately. Costs for the basic and common types generally range as follows:

  • General liability insurance – from $90 per month, or $1050 per year.
  • Workers compensation –with a few employees from $2,000 to $3,000 per year, with premiums increasing based on the number of employees.
  • Professional liability – from $85 per month, or $1,000 per year

Most of the other coverages are totally dependent on the specifics of the insurance provided. Cost depends on factors such as the number of employees, levels of inherent risk you have in your operations, past history, etc.

Is General Contractors insurance worth it? 

The answer to this question involves another question – Can you and your company afford not to have this coverage?

For businesses of all sizes, accidents happen, unforeseen events occur, and you cannot guarantee that circumstances will remain exactly what you expected when you took on the work.

All insurance comes at a cost, but the safety that it gives you, protecting you and your company from possible damage that can come from many directions, makes the value clear.

Plus, to find the insurance companies that give the best value for your money, you can turn to industry bodies, experienced agents and brokers, and the general web community.

How to save money when buying your General Contractors insurance policy?

Insurance is highly competitive, and there are hundreds of companies out there that are keen to get your business. The way to get the optimum coverage for the least possible cost is to talk to experts like specialist agents and brokers. As well, your state and local Better Business Bureaus and business lobbies are experienced in finding the best insurance for general contractors.

Q & A

Q. Is annual premium payment mandatory?

A. Most insurance companies will allow you to make monthly payments without penalty.

Read more about small business insurance and they work at 4menearme.com.

Final thoughts

There are multiple resources you can turn to with considerable experience in helping general contractors find the best insurance companies for their needs. With their help, you will find the most suitable among all the available policies, and then you can choose the most suitable, affordable, and comprehensive solution.

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