The nature of a contractor’s work keeps him constantly in risk of litigation. For this reason, the number one ally of every contractor is a good insurance policy. There are different types of policies, each of which cover the various range of mishaps that can occur in the work place. Each type has its own set of pros and cons and can be apt for one situation but not another, therefore, it is best to properly understand each before deciding on any one policy. This article discusses the different options available for contractors when choosing the insurance policy best suited for their needs.
1. Surety Bonds
This is a measure you can take if you are not able to complete the project which was decided by your client in your contract. The surety bond will cover the costs of any damages that your client may have suffered from when you were unable to complete your duties.
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2. General Liability Insurance
This policy, as its name suggests, covers a large range of mishaps that can possibly take place while you are working on your project. For its large area of coverage, it is one of the most commonly used insurance policies that contractors flock to. Some of the damages that it covers includes personal injury which covers for the cost incurred during an injury of anyone in the premise of the project, property damage and product liability which is used when a product which you have used in the project causes harm to someone.
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3. Workers Compensation Insurance
In the day and age of workers’ rights valued more than ever, most contractors tend to have some insurance policy which covers the needs of the workers. This policy is your back up in the event that you face a lawsuit due to one of your workers becoming injured or falling sick through work-related causes. It also covers medical costs that the worker may need and compensates the worker for the working days he may have lost because of the hazardous work environment.
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4. Excess Coverage
Also known as umbrella Coverage Policy, this covers the possible damages that can occur which are not covered by the General Liability Policy. This policy is often regarded as an extra measure that a contractor should opt for only when he can afford it. If not, then his priority should be getting the general liability coverage.
5. Commercial Auto Liability
This is an important policy in case you own one or many business vehicles. Often contractors find that the work site itself may have no damage but it’s not the same case with their cars. Cars are always at the risk of being crashed, scratched, or simply not working, so it’s best to get a policy which covers them. Some policies even cover for the personal vehicles if the owners are using them during work.
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These are the basic insurance policies that every contractor should have as he starts out with his own business. There are more policies which are specific to particular locations or types of work, however, contractors need to see these based on his contract.
