As a contractor, you already know that your risks are high. Your worker may get injured while working on a project site or a client may file a claim against you for property damage. These scenarios are not uncommon, they happen for real.
But there should be something you can do to protect your business from risk. Now, this is where contractor insurance comes in. There are various types of insurance policies for contractors but if you are a general contractor, roofer, or perform any type of construction work, you need general liability coverage. You may want to visit contractorbond.org to find out the type of insurance that your business needs.
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What is General Liability Insurance?
It is a policy that protects clients from suing your company for causing damage to them or their property. It is also called commercial general liability insurance. Businesses purchase this policy because accidents do not make announcements before they happen and clients prefer to hire contractors with some form of coverage.
General liability insurance offers 3rd party coverage. In this context, the third party refers to people who are not your employees. They may include vendors, customers, or landlords.
What Does General Liability Insurance Cover?
The policy covers the following:
- Medical and legal costs for a customer who sustained an injury in your office, shop, or construction site.
- Cost of repairing a client’s property that was accidentally damaged.
- Cost of repairing or replacing damaged property after a repair that went wrong.
- Personal injury claims that are related to libel and copyright infringement.
What Isn’t Covered in a General Liability Insurance?
It is risky to think that general liability insurance covers all damages. As mentioned earlier, it will only cover third-party damages. This implies that the policy will bear the cost of repairing a customer’s property, not your company’s property.
Additionally, if the damage was out of your own carelessness, your company will bear the brunt. Below is a description of what a general liability policy won’t cover.
If you or your employee worked on a customer’s property, for instance, the faucet was leaking and then you fixed it. You ensured the problem was resolved professionally but after one week, the faucet began leaking again. The customer can sue your company and general liability insurance will cover the costs.
Now, assuming your employee did a shabby job, or in the process of fixing one little fault, they ended up creating a major structural problem. The policy will not work here because it is clearly a case of poor workmanship. What you need is a professional liability cover because a customer can even file a lawsuit against your company for giving them poor advice during consultation.
Personal Property Damage
If a customer damages your property, the policy might cover it. But if your employee damages your property, the policy will not cover it.
Whether you are using your personal vehicle for business or not, a general liability policy can’t cover it. In fact, your personal automobile insurance may not work here since you’re utilizing the vehicle for business purposes. Therefore, you need commercial automobile insurance in case of vehicle damage.
If an employee or subcontractor intentionally damages your property, probably due to anger, the policy won’t cover the cost of repairs. When you are in your workplace, you must behave professionally. If you damage anyone’s property, you will be held responsible. Also, employers should train their employees to act responsibly.
If your employee sustains an injury while working, a general liability policy can’t do anything about it because it is not a third-party injury. In this case, what you need is a different type of policy known as workers’ compensation. So, if you plan to employ people, ensure you get the appropriate coverage. You can read this article to learn more about workers’ compensation.
How Much Will It Cost to Get General Liability Insurance?
Getting this type of coverage varies between hundreds to thousands of dollars per annum. Several factors determine the amount you will pay. For instance, if your company is classified as high risk, you will pay higher. A typical example of a high-risk company is a construction firm.
Other things that will determine the cost of coverage include the following:
- The number of people working in your company.
- History of insurance claims
- Location of your company
- Coverage limits
Every business needs protection against lawsuits, damages, and other types of incidents. You may not be able to get all the insurance available but you must have the basic protection your business needs. Therefore, contractors must have general limited liability coverage to guard against third-party damages.