Contractors insurance can help protect your employees, daily operations, assets, and from liabilities that could cause a massive financial burden. Businesses can try everything in their power to do everything right, but unforeseen events can occur when least expected. We’ve evaluated the best business insurance providers based on coverage, financial stability, customer satisfaction, and overall quality.
Coverwallet began its journey in New York City in 2015 operating under the
Aon Insurance banner. At Coverwallet, you can access everything you need to
keep your company well-protected at an unbeatable price.
With a 100-year history of insuring businesses, Hiscox is well-known across
America and globally. With more than 500,000 small business customers,
Hiscox is fully aware and trained in the unique risks a business can face.
Thimble provides business insurance that can be tailored to your business by
the year, month, day, or even the job. At Thimble, the process to getting
the right business insurance is simple, scalable, and flexible.
Contractors insurance is a policy with a premium paid out according to each policy’s specific requirements, which protects a business and its owner or owners from financial obligations. These financial obligations can result from accidents the company may be liable for or loss of property or assets. It includes financial protection for a business’s employees and assets.
Who needs contractors insurance?
Contractors working in all trades typically purchase similar insurance policies. The differences are the cost of the different policies based on the business. Each business has limitations and unique exclusions that owners need to consider before purchasing a policy. Some examples of trades include (but not limited to):
General Contractors
Roofing Contractors
Electricians
Plumbers
HVAC Contractors
Carpenters
Painters
Landscapers
And many others who provide a service for a fee
What insurance do contractors need?
There are four main types of insurance that contractors should consider carrying. Each one protects your business from different accidents.
Commercial auto liability
This type of insurance covers any injuries and property damage you or an employee may cause to another person or business while driving. This auto policy can also include coverage for rental vehicles and employees’ cars used for your business.
Inclusions
Auto liability: Pays for any bodily injuries or property damage you could be liable for, resulting from a covered vehicle accident.
Medical payments: Pay up to the limit of your coverage in medical expenses for you, your passengers, and your employees which may arise from a motor vehicle accident, regardless of fault.
Comprehensive coverage: Pays for damage caused to your vehicle by something other than a motor vehicle accident. This includes theft, damaging weather conditions (like hail), accidents involving accidents, and vandalism.
Collision coverage: Pays for damage to your vehicle regardless of fault. Whether the vehicle rolls over, you or an employee hit another vehicle, or another vehicle hits yours, this will cover it (after the deductible, of course).
Uninsured or underinsured motorist coverage: Pays for damages such as loss of income, medical expenses, property damage, etc. owed to you, your employee(s), or passengers when involved in an accident with the uninsured motorist.
Exclusions
Activities that pose a high risk: Intentional property or bodily damage is usually excluded from policies.
Pollution: Any bodily or property damage that occurs due to pollutants before being loaded, loaded, or after unloading from your company vehicle.
Racing: If you or an employee is engaged in any type of organized racing and cause an accident with bodily and/or property damage with the company vehicle, your policy will not cover any lawsuits that arise. This also applies to stunting and demolition style contests.
War: Coverage is usually excluded for any injuries sustained or property damage as a direct result from a war, including insurrections and/or rebellions.
Workers compensation
Also known as Worker’s Comp, Workers Compensation Insurance can help cover an accident in the workplace or if an employee is on company time, off premises, and has to seek medical care. Employees can only file a claim for workers’ compensation if their injury was brought about while on duty at their job. Common claims filed include injuries from a fall, operating or being around heavy machinery, and strains from bodily exertion.
Inclusions
Medical care for injuries occurring while on the job: This includes on premises injuries as well as those occurring when an employee is working off premises for the benefit of their employer.
Temporary disability: A benefit that pays an employee for the duration that they are not able to work at two thirds of their average weekly wage. These benefits have a limit of 104 weeks with a deadline of five years after the date of the injury.
Permanent disability: Benefits are paid out based on a calculation of 0 to 100% scale of loss of function. The pay out is made on a weekly basis. The period of time is set and depends on the severity of the disability.
Job displacement benefits: This is covered in the event that the injured employee can not continue working in the same position after their condition stabilizes.
Exclusions
Commuting to and from work: Driving to work and returning home is not included in the scope of work responsibilities and will not be covered.
Team building or recreational activities: This is not directly for the benefit of the employer. Activities such as company luncheons, holiday parties, or organizing a happy hour at a local bar will most likely not be covered by workers compensation insurance. There are factors which may grant coverage for these types of activities, such as required attendance (or reasonable belief that attendance was required), the attendance of the worker benefitted the employer, or if the event happened on premises during normal business hours.
Substance abuse or intoxication: If an accident was caused by a worker’s self-intoxication, almost all state workers compensation laws exclude the injury from being covered.
Rough-housing and fighting in the workplace: These activities are not related to the scope of work and fall outside the coverage for workers compensation.
Errors and omissions
This type of specialized insurance offers liability protection for areas not typically covered by general liability insurances. It can protect both you and your business from a claim for negligence if a client decides to sue.
Errors and omissions policies vary greatly depending on the trade of the contractor. A plumber who could make a mistake and flood a home will have many different terms than an accounting firm that could make a mistake with the taxes of a large client and cost them thousands of dollars. Typically, any business that provides a service in exchange for a fee should consider errors and omissions insurance.
Inclusions
Covers any damage you or your business may potentially be liable for with regards to a service you offer. This can include personal or advertising injury, client monetary losses due to your product(s), and property damage.
Exclusions
If a client injures themselves.
An employee steals from the company or its clients.
If a client’s property is damaged.
If your company is hit with a cyber attack.
Umbrella liability
In addition to your business auto policy, general liability, workers compensation, and errors and omissions insurance, umbrella liability covers most areas where other insurance coverages stop. Essentially, it is an extra protection layer around yourself and your business if your other policies do not cover an accident that falls within your responsibility.
Inclusions
Injuries that extend beyond the normal general liability policy coverage, or after the general liability policy is exhausted.
Damage to property that extends beyond the normal general liability policy coverage, or after the general liability policy is exhausted.
Lawsuits that arise that are outside the scope of your other insurance policies.
Situations that come up that you may be personally liable for such as someone tripping on your property and suing.
Exclusions
Your injuries or your own personal property that is damaged.
A criminal act caused by you, or an intentional act that causes injury or property damage to someone else.
If a contractual agreement causes you to assume liability.
What are the limits of contractor’s insurance?
Depending on the trade, contractor’s insurance can have a wide range of limits. Typical limits for policies in general and professional liability insurance is up to $1,000,000 for each occurrence. This includes bodily and property damages and personal and advertising injury liability. There is also a $2,000,000 general aggregate insurance to accompany it.
How much does contractor’s insurance cost?
Each type of contractor’s insurance has its premium. Here are the median costs per year for the different types:
General liability – $1,090
Workers compensation (varies depending on number of employees and trade) – $3,175
Commercial auto liability (varies depending on number of employees and vehicles) – $1,990
Errors and omissions (varies depending on number of employees) – $765
The main factors that may affect your premium are:
Credit history of the business
Type of business and risk associated with it
The policyholder(s)
Named insureds
Size of the project (if applicable)
Coverage limits and deductibles
How to choose the best contractor’s insurance?
To choose the best insurance that meets your needs, you should first research your specific needs for coverage based on your trade. Once you have a good idea of what needs to be covered, you can start shopping around and finding the policy that best fits your budget. Identify what the policy does not cover and search for an additional umbrella or professional insurance that can protect you and your assets where the other insurance policies fall short. You can shop and negotiate with the different companies to get a policy that best suits your needs and budget. Here are a few things to look for when shopping for a contractors insurance provider:
Positive online reviews
A rating on the Better Business Bureau
Time in business (if they have been around for a while with these other factors in place, they must be doing something right)
Specialization in contractors insurance, they know what they are doing
Their representative is able to offer advice and offer products that best fit your needs
Quick turnaround for quotes
Offer a few different price points and product tiers
Able to accept a variety of different payment methods
