Is Contractor Insurance Important for a Construction Company?

Every contractor whose work involves signed contracts must take an interest in understanding what type of contractor insurance is best for their business. Whether your profession is construction, architecture, engineering, or some other form of contracting, you need to understand the various coverages available to reduce your financial risks.

Why Is Contractor Insurance Important for Construction Companies?

Without sufficient contractor insurance, your construction business can get drained financially from lawsuits filed by clients, partners, competitors, or other third parties. But if you have the right contractor insurance policy in place, the provider will pay the legal costs of lawsuits against your company. It's also important that your subcontractors carry sufficient insurance.

What Are Common Coverages for Contractors?

Since there are many types of contracting services, there are also various types of contractor insurance. Review the following common coverages for contractors to consider for your business:

• Comprehensive general liability:

  You need liability coverage to pay for accidents that may occur at your premises. Comprehensive general liability coverage pays for damages to your property and injuries to visitors regardless of who is at fault. This coverage is often expected by clients.

• Workers compensation:

  All states require employers to carry workers' comp if they hire a certain number of employees. This coverage pays for accidents involving employees that occur on the job. It also pays a certain percentage of an employee's regular wage for lost time. Failure to carry workers comp can result in severe fines issued by the state.

• Completed operations:

  If you need to financially protect a project after the work is completed, the solution is completed operations coverage. It pays for claims involving construction defects that are discovered after the completion of the project.

Key Takeaways

As a contractor, you must build a reputation in your community as an entity that lives up to what's stated in your contracts. You need to make sure that every contract you issue or sign has the right insurance coverage to go with it. It's possible to be held liable for scenarios you thought were covered by insurance but aren't. The best way to approach setting up a new contractor business is to assemble a team of experts in the fields of business law, accounting, and insurance. You will then get a broad view of what you need to do to protect your assets.

Know Your Risks and Protect Your Business with Fuller Insurance

It's essential for all contractors to carry customized contractor insurance that reflects their risks. Ideally, you will focus on ways to reduce risks involving contract work. For more information on getting the right coverage plan for your business, contact the experts at Fuller Insurance Agency. We are ready to assist you in finding the plan that matches your business needs.