A person who runs a contracting business is putting themselves at significant risk if they don’t have contractor liability insurance. Every day at work is a risk that one of your contractors could get hurt. Should that happen, you want to protect your interests and the interests of your company. Liability insurance protects you if a contractor gets hurt and decides to sue you.
In a perfect world, every job you take would be done to completion and done without error. Sometimes, however, a client might feel like you failed to deliver. Even if you know you’re right, any court battle or legal issue could cost a lot of money. Any third party or client can argue that a mistake was made or that you cost them financially. Without contractor liability insurance, you could end up having to close up the shop to pay those costs.
Let’s learn comprehensively about what’s covered under contractor liability insurance and what isn’t.
Who Should Get Contractor Liability Insurance?
Contractor liability insurance should be purchased for general contractors, subcontractors, or property owners acting as their general contractors for a specific project. This type of insurance activates when there’s a lawsuit against your company. Similarly, it may protect you when a liability claim occurs on the job site.
The contractors insurance can handle all claims, judgments, and settlement costs for damage or injuries under the contractor’s care, custody, or control. This type of insurance covers various malpractice, negligence, or error elements.
Contractor liability insurance policies vary by insurer. The types of work under this insurance include anything done by a contractor, such as renovations and repairs. Some examples include window installations, electrical work, roofing, heat and air conditioning, drywalling and plastering, landscaping, painting, plumbing, and more.
Protect Your Company from Being Sued for Bodily Injury
Someone may eventually get injured if you work on job sites long enough. It could be minor or major. Contractor liability insurance covers associated costs if a contractor is injured on the job site. The insurance will reimburse the worker for time away from work. If your worker decides to sue your company for medical costs, contractor liability insurance prevents you from having to pay out.
Protect Yourself from Faulty Materials or Faulty Products
Contractors rely on manufacturers to produce high-quality products. There is always a possibility that material could be defective, hazardous, or cause a loss for the client. Contractor liability insurance will protect you if the material is defective or damaged. The product may also cause damage or serious injuries. Although these accidents are out of your control, they put your company in trouble without the necessary precautions.
Protect Your Clients and Contractors from Property Damage
Another area where contractor liability insurance can protect you is with a client’s property. If you’re entering someone’s home, such as with an electrician, plumber, or roofer, there’s always a chance that the property could become damaged. Something heavy could fall. An accident done by the contractor could cause damage. If anything happens and you’re sued, your insurance covers those costs. The insurance prevents you or your company from being saddled with the bill.
What Contractor Liability Insurance Excludes
Contractor liability insurance protects you if a contractor sues you. However, liability insurance will not protect you or your company if an employee sues you. Liability insurance only applies when you are sued by someone other than an employee.
Several situations fall outside the boundaries of contractor liability insurance. It will not cover situations that are proven to include deliberate dishonesty, misrepresentation, or fraud. The insurance is voided if it can be proven that these elements exist in a claim. Subsequently, the costs would then fall back onto the contractor. This highlights the importance of honesty in business dealings and hiring reliable contractors.
Advise Your Insurer About Accidents
If you fail to advise your insurance company of a known incident that could likely result in a claim, you may not be covered in certain scenarios. Even if it’s unlikely to escalate to a lawsuit, always advise your insurer when something has happened. Of course, you may be caught off-guard being served by someone. If you know there’s a risk ahead of time, contact your insurance company to ensure they understand what happened. They will begin the process of documenting a specific incident or claim.
