In the construction industry, getting robust business insurance coverage is crucial for safeguarding a company, especially when property damage or bodily injuries are common. In other words, if you are a contractor, you need strong coverage to cover yourself and your business. The available coverage needed is known as General Contractor Liability Insurance.
General contractor liability insurance provides coverage against regular claims due to injuries and property damage caused by your company. Additionally, this coverage is known as the backbone of risk management for every construction company and small business. This article will explain what a general liability contractor is all about, what it covers and does not, and how to get it.
How Does General Contractor Liability Insurance Work
General contractor liability insurance is designed similarly to other kinds of business coverage. For instance, the policyholder pays the provider regularly, and the provider accepts to take on financial perils if the policyholder is sued. Moreover, this coverage shares similar factors with other kinds of insurance policies;
- Coverage: the terms and conditions under an insurance provider will permit to reimburse claims. This covers the forms of events that qualify for coverage and additional limitations that might restrict your qualifications, like illegal or intentional actions.
- Premiums: the continuous cost a policyholder should reimburse to keep their coverage active.
- Deductibles: the sum of funds that a policyholder should cover out of pocket before their coverage starts to be reimbursed.
- Policy limit: the highest sum that a policyholder will cover for claims under an insurance policy, which can either be a cap or a per-claim amount.
Moreover, each of these covers can affect the others. For example, policies with higher deductibles offer minimal premiums since the policy bears more risk. In addition, policies with higher coverage might have maximum premiums since there is a significant possibility that the provider will pay for the claim.
What Does General Contractor Liability Insurance Cover
General contractor liability offers coverage for third-party claims against damages resulting from the operation of the policyholder’s contractor business. In addition, it also offers coverage for bodily harm, property damage, completed operations and products, medical costs, and personal and advertising injuries. The following are the kinds of coverage that general liability insurance offers;
Bodily injury
If a client or a third party gets injured due to your work such as falling over some wires, general liability insurance would cover legal expenses and any settlements that might be given, up to your coverage limits.
Property damage
While doing your duties, you may cause inadvertently harm to a client’s property such as flooring, drywall, or furniture which could support in paying the expenses.
Personal and advertising injury, including libel and slander
If you cause inadvertently damage to another company by libel, slander, or advertising, a general liability insurance policy may support in compensating the other company for losses.
Furthermore, this insurance policy will cover expenses like settlements, court, and legal expenses for every coverage type up to the limit. It will also have coverage limits per incidence and aggregate. For instance, general liability insurance might have coverage limits of $1 million / $2 million for small and medium-sized contracting businesses.
This simply means that each event would get coverage of $1 million and annual policy would cover $2 million for all claims together. Lastly, multiple policies offer the opportunity for extra coverage or endorsements depending on the specific requirements of a business.
What Does General Contractor Liability Insurance Not Cover
Since general contractor liability insurance offers significant coverage, it’s crucial to note that it does not cover everything. The following are some incidents that general contractor liability coverage does not cover;
Intentional harm
Since general contractor liability insurance offers coverage resulting in bodily harm and property damage, it does not offer coverage for deliberate actions that can cause harm to someone.
Contractual liability
Despite general contractor liability insurance only covers your actions, the third party will require separate general liability insurance if you accept their liability under a contract.
Workers’ compensation
General contractor liability insurance does not offer coverage against harm to your workers. However, they can get covered if legally mandated for workers’ compensation insurance.
Pollution
The construction industry requires coverage to cover pollution if its operations result in pollution that causes harm or damage. In addition, general liability contractor insurance does not cover such incidents.
Errors and omissions
Although clients may file claims for financial loss as a result of negligent work, it’s crucial to get professional liability insurance. This can help to cover these claims instead of general liability.
General liability insurance does not cover a wide range of other incidents. Furthermore, even covered situations have exclusions, so it’s essential to carefully read a policy to make sure your provider will cover the work your business does appropriately.
How Much Does General Contractor Liability Insurance
The cost of general contractor liability insurance differs since each business is different. Furthermore, insurance providers evaluate various factors when estimating the cost of this coverage. The following factors include;
- Contracting services like residential and commercial.
- Commercial equipment and property.
- Company size and revenue.
- Coverage types obtained like pollution liability insurance or builder’s risk insurance.
- Deductible, coverage limits, and claim history.
- Amount of workers.
Most general contractors can compare quotes from various providers of business insurance to save money. Furthermore, your policy type, coverage limits, deductibles, locations, and amount of workers will affect your premium.
How to Get General Contractor Liability Insurance
As a contractor or business builder, it’s straightforward to obtain insurance coverage and surety bonds if your business details are available. You will be required to answer some basic facts about your company like the income amount of workers in the insurance application. With some insurance providers, you can get policies online and a certificate of insurance in three simple steps:
- Fill out a free online application.
- Evaluate insurance quotes and select policies.
- After paying for your coverage, obtain a certificate.
Whether you operate as an independent contractor or employ staff, certified insurance brokers would collaborate with the nation’s best-rated insurers to find the most economical coverage for your general contracting company.
Major Benefits of General Liability Contractor Insurance
General Liability Contractors Insurance safeguards contractors from financial obligations due to damages or medical payments from work-related injuries. It is often required by clients to ensure financial capacity for claims. Furthermore, it offers a Certificate of Insurance for all contractors and can provide additional insured documents upon request.