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Accidents at the site of work or on the road while traveling to your client's location and stolen or lost equipment are some of the risks that general contractors have to face on a daily basis.
Having general contractors insurance will shield your business from any claims and lawsuits that can be financially devastating for your contracting business.
Why Do General Contractors Need Insurance?
General contractors face various degrees of risk for which they need to be protected by taking out an insurance policy just in case an accident happens.
For example, if a contractor is working on a job site and someone gets hurt, they may file a claim against the contractor's insurance policy. Or, if there is a fire or other accident at the job site, the general contractor's insurance policy would likely kick in to cover the costs.
If the general contractor doesn't have insurance, they will have to pay the costs out of pocket, which can be devastating for any small contracting business.
In other cases, general contractors simply don't have a choice as they are legally required by state law to take out a level of coverage before they can legally trade and work on projects.
What Types of Insurance Do General Contractors Need?
General contractors can benefit from a wide variety of insurance policies. The level of coverage you should get will depend on the size of your business, the number of employees and company cars you have, the state you operate out of, the clients you deal with, and more.
Please take a look below for a more detailed overview of the most recommended general contractor insurance policies.
How Much Does General Contractor Insurance Cost?
The cost of general contractors insurance varies from business to business. Generally speaking, the bigger your company and the higher the cover you take out, the more expensive your premium will be.
On average, you can expect to pay $90 per month on contractors' general liability insurance. This type of policy will protect your business from claims and lawsuits related to third-party bodily injuries and property damage.
For worker's compensation insurance, you can expect to pay around $265 per month. This policy will safeguard your staff in case of an accident. It will cover not only their medical bills and rehabilitation costs but also any lost wages during their recovery period.
If your business has company cars, the premium you can expect to pay for commercial auto insurance is around $165 per month. Such a policy will cover your business from any claims and lawsuits resulting from road accidents. It will protect your vehicles, staff, and any third party involved.
If you have expensive tools and equipment, insuring them will cost you approximately $15 per month. That way, if they get lost or stolen, you won't have to pay out of pocket for replacements.
And lastly, for professional liability insurance, general contractors pay an average of $45 per month. This policy is also known as E&O or errors and commissions, which can protect general contractors from client lawsuits relating to negligence, late, unsatisfactory, or incomplete work.
Typical General Contractor Insurance Claims
General contractors are exposed to various types of risks that can lead to accidents. As a result, the most common general contractor insurance claims are related to property damage and bodily injury.
In other instances, general contractors also make claims regarding road accidents, payment disputes with clients, and in rare cases - lost and stolen tools and equipment.