3 Reason To Have Contractor’s Liability Insurance

There’s a reason everyone you see at a construction site almost always wears protective gear, such as hard helmets and safety shoes.

Construction sites are extraordinarily action-packed and inherently high-risk zones. These sites will require more than just protective clothing to ensure workers are optimally safe.

Knowing that injuries and damages are likely to occur at some point in any of your contracted jobs can be a source of stress. However, with the right policy, you can limit the impact of the accidents on you, providing a sense of relief and peace of mind.

It’s easy to imagine being in a similar situation as a contractor whose team accidentally damages a client’s property while installing new fixtures.

Without insurance, the contractor would have to cover the costly repairs out of pocket, risking financial and reputational loss. With general liability insurance, the policy steps in to handle the expenses, allowing the contractor to focus on completing the job and maintaining client trust.

While there are different kinds of business insurance policies your company should consider having, this article will focus on General Liability Insurance. Let’s go through some of the reasons it’s a good idea for your company to get one.

Key Takeaway

Construction contractors know accidents are inevitable, so proactive insurance coverage protects business finances and reputation.  Insurance also helps with client trust and winning bids.

Why Contractors Need Insurance

The first reason is pretty apparent, but it deserves as much emphasis as possible. The last thing you want as a contractor is to end up footing a large bill that you could have avoided by merely having a little foresight.

In the construction industry, accidents or miscalculations are a daily possibility, not a remote chance. There’s so much heavy-duty machinery, scary heights that workers have to climb, and a lot of work, which amounts to tired people, and exhausted people are more prone to making mistakes. In the end, it’s not a matter of whether an accident will happen, but when.

So, your need for protection in such events should be anticipated and planned for. Work with an experienced contractor’s insurance broker who can help you find the protection you need for your business. With their help, you can get a General Liability Insurance policy that will cover:

• Expenses for property damage claims against your company
• Medical expenses if someone is injured at work
• Damages that a product your company installed might cause
• Advertising injury claims against your company
• Administrative costs for the handling of the covered claims
• Court costs, judgments, and settlements on claims

In general, this coverage helps protect you and your business from liabilities arising from accidents involving other people and property that are not necessarily your employees or property.

Interacting with clients and other parties always carries risks. It’s essential to anticipate these risks and have a plan in place to address them. Failing to do so can lead to financial strain or damage to your company’s reputation if you can’t cover the costs of accidents that harm your clients or their property.

Make Your Bids Stronger

There’s competition in almost every industry, but it’s more direct in construction. Your business will have to submit bid documents that compete against a pool of other bids from other construction companies.

Your company’s case will have to prove that your proposition is better than the rest. To gain this competitive advantage, a good place to start is ensuring your company mitigates risks.

For contractors, having General Liability Insurance goes a long way toward helping them attract and retain clients.

It Is a Requirement By Law

In the end, it’s simply not a matter of choice whether your business should get General Liability Insurance or not. It is a legal requirement for contractors, but these requirements can vary depending on your state, local regulations, and the type of projects you take on.

Some states and certain clients may mandate proof of insurance before any work can begin. You need to understand the specific legal obligations that apply to your business location and the nature of your projects. While these rules are in place to protect others, they also serve an important role in protecting your own business.

Understanding the different requirements based on where your construction company is located empowers you to be savvy about the laws governing your business, making you feel knowledgeable and in control.

Make Safety Your Priority

Building contractors in the U.S. require liability insurance to protect their businesses, fulfill legal and contractual obligations, and maintain their credibility with clients.

Financial protection from accidents and lawsuits is just one reason why, as a contractor, you can’t afford to go without insurance against accidents.

Property damage caused by construction work, and if the unforeseen happens – i.e., someone is injured without the contractor’s liability insurance, your business may fail.

Just because an accident hasn’t happened doesn’t mean you should always count on that luck. When an accident occurs, having General Liability Insurance will be your business’s significant advantage. It’ll save you from losing a massive chunk of your company’s money in one go and even from potentially going broke.

If you’re looking for ways to propel your contractor business to the next level, make sure your company has an up-to-date and consistent policy that can help you gain the trust of new clients and win new bids.

Paying for premiums is an important investment and should be a crucial part of the growth you’ve been planning for your company.

When budgeting for insurance, keep in mind that several factors can affect your premium amount. The size of your company, the type and scope of projects you take on, your company’s claims history, and even your location can all influence the cost. Understanding these factors will help you plan and compare options to make the best choice for your business.

References

Nerlinger, S. (July 20, 2022). Construction Site Accident Statistics. LegalMatch. https://www.legalmatch.com/law-library/article/construction-site-accident-statistics.html