Compared to other professions, contractors face many unique risks. Not only do contractors have clients that rely on them, but they also work on client property with heavy and destructive equipment. This risk is reflected in the amount of insurance contractors need.
The true amount of insurance needed depends on the contractor and the business. Contractors who work on expensive projects may want more liability insurance, while those who employ more workers will want higher levels of workers compensation. Still, there are some coverages every contractor should benefit from:
- General Liability Insurance: These policies typically come in millions, with the lowest limited at $1 million worth of coverage. For contractors, this insurance costs about $1,090 per year (around $90 per month). It protects against claims from third parties involving advertising injury, property damage and personal or advertising injury.
- Commercial Auto Insurance: This coverage is extremely valuable to contractors. Contractors often use trucks, vans and other vehicles to transport work equipment and to drive back and forth between clients. Unknown to most, a personal auto insurance policy will not cover most incidents while the vehicle is being used for work purposes. A lot of the same coverage (collision, comprehensive, uninsured/underinsured motorist, medical expense coverage, etc.) is available under a commercial auto insurance policy as under a personal policy. There are also laws about commercial vehicles and insurance that vary per state. Make sure to check your state’s laws to make sure your commercial vehicle is kept up to regulation.
- Workers Compensation Insurance: In some states, workers compensation coverage is required. This coverage provides compensation if an employee is injured at work by covering immediate medical expenses, disability benefits and lost wages while the employee is unable to work.
- Equipment Breakdown Insurance: Equipment breakdown insurance is crucial for contractors who use a lot of equipment for work. This coverage compensates if a piece of equipment vital to the business suddenly stops working.
This may not be the only coverage you need. You can also purchase a business owners policy (BOP), which combines general liability insurance and property coverage into one comprehensive policy. You can often add commercial auto insurance to the policy, but other items such as workers compensation coverage must be purchased on a separate policy. Make sure to speak with your Select Insurance agent if you have questions about your coverage.
Get A Quote