All contractors, irrespective of their field of duty, have one thing in common: they are in a risky industry and need to secure themselves, their employees, tools of trade and businesses in general. Insurance for contractors offers protection from all kinds of dangers that can leave their companies bankrupt.
There are various kinds of insurance policies suitable for contractors in need of protecting their business from claims related to general liability, and equipment and tools failure.
Due to financial constraints, contractors are not able to pay for all insurances they would need in their line of duty. However, a professional contractor should at least have these three forms of contractors insurance.
1. General Liability Insurance
This is a package that provides cover for customer injuries and customer property damage, including lawsuits related to both. This insurance package is a necessity for contractors because of the following reasons:
It Protects Contractors and their Businesses – The general liability insurance protects the contractors from paying legal fees resulting from a lawsuit. A client may sue a contractor for injuries, damages or poor workmanship.
Read more about General liability insurance and builder’s risk coverage at:
Clients Request for it – Most clients require a contractor to at least have this insurance package before they can allow them into their projects. Clients are cautious to have to battle with contractors in courts in case of accidents or uncompleted projects.
It’s a Law Requirement – The law often requires contractors and clients to have insurance policies before construction work commences. This is to ensure accidental injuries and damages will be taken care of.
2. Workers’ Compensation Insurance
This is suitable for employees in the construction industries as they have a high risk of injuries or loss of lives. The cover caters for employees’ medical bills, partially missed wages, and recovery costs. In the worst cases where an employee dies in the line of duty, the cover caters for funeral expenses and compensates the immediate family of the deceased.
In most countries, the law requires companies to get this cover immediately they get their first employee. The premiums paid for these covers cannot be compared to the loss a company would undergo if they have to pay for medical bills, compensate the employee as they recover and/or pay for funeral expenses and compensations.
3. Errors and Omissions Insurance
This is an insurance package that is commonly referred to as professional liability insurance (PLI). It compensates a client for damages resulting from professional mistakes while working on a project.
Professional contractors can make errors either due to negligence, equipment failure or other natural courses. A client is compensated for the damages made without the company digging into its pockets to pay for the same. However, the companies must have spent all their premiums for the injured to receive compensation.
In construction work, accidents occur, whether they are human-made or due to natural causes. Insurance policies exist to protect both companies from the struggles they can face if sued or when they need to compensate a client, employee or a third party.