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.

Only Hire Bonded and Insured Contractors

Do you want to hire a contractor to carry out some work on your property or home? Are you aware that you can be safeguarded from contractors if something goes wrong? If you are planning to hire a contractor for your home improvement project, then you need to ensure that he is insured and bonded. Hiring a contractor who is not bonded and insured is risky as you will not get any compensation in case something wrong happens during your contract.

Differences between Contractors Bond and Contractors Insurance

A contractor’s bond protects the client in case the contractor does not finish his job as agreed like failing to pay subcontractors or not paying licenses on time. This gives you the surety that you will not lose money or your property to be damaged during the contract. The bond guarantees you that the contractor will perform the contract as agreed or else he will lose his money for doing a shoddy job.

Contractor insurance covers the damages that might have been caused to your property or offers compensation to workers who are injured while executing your contract.

Reasons why you should only hire insured and bonded contractors only

There following advantages can be enjoyed when hiring bonded and insured contractors as opposed to the ones that are not insured as discussed below;

  • A bonded and insured contractor has all required building permits and this assures you that your project will meet all the safety and building codes. He ensures that your project meets all the professional standards.
  • The contractor may be fined or get censured by contractor’s board if he fails to perform the work as you had agreed in the contract
  • Bonded contractors add value to your home when you want to sell it. This is because most lenders will look for the permit of the contractor who renovated it before approving the funds.
  • Having an insured and bonded contractor for your project helps you to avoid unnecessary liabilities like innocent accidents or unsafe procedures used by workers that may lead to injuries.
  • It helps you to recover your funds in case your contractor neglects your project or if he dies.


If you want to avoid the risks and stress involved with hiring uninsured contractor, then you need to hire a contractor who has good credentials of his trade. Hiring a bonded and insured contractor will ensure that your project runs smoothly and is completed within the agreed time.