All small businesses have insurance coverage needs unique to their industries. The risks your construction and contracting clients face dictate the appropriate policies for them. Knowing your client's specific needs can help you find coverage quickly, making you a trusted ally as they develop a risk management plan.
The policies below are key coverages your construction and contractor clients should consider. Each protects your client's business in a different way:
General Liability Insurance
This policy steps in when a third party (i.e., a non-employee) sues your client over bodily injuries sustained on their commercial premises or property damage your client allegedly caused. It can reimburse your client for legal expenses, including judgments or settlements. For example, if your client breaks a window while working on a customer's roof, General Liability Insurance may provide compensation for the claim.
Construction workers and contractors might have office space, workshops, tools, materials, and expensive equipment that all need protection. Property Insurance compensates your client when these business assets are lost or damaged because of fire, theft, or windstorms.
Workers' Compensation Insurance
The physical labor and potential exposure to hazardous materials in construction means your client and their employees run the risk of occupational illnesses and injuries. Workers' Compensation covers your client's employees' medical costs and lost wages when work injuries take their toll. Workers' Comp policies are often state mandated, but even if they aren't, many of your client's contracts will require this coverage.
Commercial Auto Insurance
Many contractors transport tools, equipment, and people to worksites. If your client does, they should consider purchasing a Commercial Auto policy. This is true even if your client uses their personal vehicle for work purposes. If your client is in an accident while driving their business vehicle, Commercial Auto may pay for the damages to their car and the damages their vehicle caused.
Umbrella / Excess Liability Coverage
Contractors are sometimes surprised by the amount of General Liability a client or general contractor requires them to carry. Excess Liability can help your clients meet these requirements by allowing them to draw on extra coverage when their GL limits are surpassed. Umbrella Insurance is a type of excess liability that extends the limits of multiple liability policies at once.
Some contractors may work out of their homes. It's important they know that a Homeowner's Insurance policy does not adequately protect their home-based business. Because construction and contracting risks have some unique characteristics, two common small business insurance policies are not a good fit for these businesses. The first is Errors and Omissions (E&O) Insurance , which covers the insured when a third party claims they were harmed by the insured's negligence. Your construction and contracting clients usually have this coverage through their General Liability Insurance. The second is a Business Owner's Policy (BOP). A BOP bundles GL and Property Insurance in an effort to keep rates low. The construction industry is too high risk to qualify for a BOP.