Best Insurance for Contractors

Your contracting business faces unique risks and dangerous risks in its daily operations. A split-second accident may happen as you repair faulty electrical wiring or install a HVAC system. Business insurance solutions for contractors may range from a single policy to a broader mix of coverages.

Besides providing coverage for natural disasters, income loss, business assets and employees, contractor insurance may be a condition for a contract award.

Let Benzinga walk you through the insurance options for your contracting business, how much it will cost you and the recommended carriers to obtain coverage.

Best Contractors Insurance

Your contracting business needs a few of the same policies as any other business as well as other coverages specific to your industry. 

To find the best coverage options for your contracting business, use an agent who's experienced in your industry or focus on insurance companies with vast experience. Start by comparing quotes from these trusted business insurers.

Types of Contractors Insurance

Business insurance laws vary by state. The federal government mandates that every contracting business with employees carry workers' compensation insurance. Commercial insurance solutions will also differ among contracting enterprises, so you'll need to assess your coverage options and choose options that best suit your business operations.

Here are the types of insurance your contracting business may purchase:

General Liability Insurance

Liability insurance protects your enterprise from another individual or business's claims of property damage, bodily injury and the associated medical costs. Having this type of insurance is beneficial in various instances:

• Bodily injury. You could be liable for the medical costs of a client who trips over your work equipment and fractures their arm. Your general liability policy will cover those costs.
• Personal injury. Your client could sue you for slander if one of your employees talks about them in a false and unflattering way. Your general liability policy can protect you up from the subsequent claim up to your policy limits. It could also pay for the costs of appointing an attorney.
• Property damage. You're roofing a client's home and their neighbor's car is parked right next to the construction site. You accidentally drop a shingle on the vehicle causing damage to the windscreen. A general liability policy will cover the claim of property damage to your policy's limits.

Commercial Property Insurance

Commercial property insurance will compensate you if your business property is damaged or lost due to perils like theft or fire. Property insurance covers the physical structure or building and personal property inside the premises, including furniture, raw materials, computers, machinery and other items you use in your business operations.

You’ll receive compensation whether the property is owned or leased. Depending on the insurance provider, you may purchase commercial property insurance as a standalone policy or as part of an insurance package bundling 2 or 3 policies.

Commercial property insurance may also provide operating funds at a time when you're trying to get back on your feet after a catastrophic loss. Depending on your policy, commercial property insurance may also include coverage for some types of water damage, equipment breakdown, and debris removal after a destructive event.

Workers' Compensation Insurance

All states but Texas mandate workers' compensation insurance for businesses that employ more than a certain number of personnel. That number varies from 3 to 5. Workers' compensation insurance pays for medical expenses and replaces lost wages for an employee who's injured in the line of duty, irrespective of who was at fault.

A workers' compensation policy may also provide disability benefits and pay for funeral expenses if an employee dies because of a work-related illness. Your insurance provider may also help cover all legal costs associated with defending your enterprise against a lawsuit from the injured employee or their next of kin.

Commercial Auto Insurance

You need commercial auto insurance to protect the vehicles used or owned by your business. Personal auto insurance is similar to commercial auto insurance, except it excludes coverage if the car involved in an accident is primarily used for business operations. The policy pays any costs to 3rd parties resulting from property damage or bodily injury for which your business is liable, up to your policy limit.

A commercial auto insurance quote will probably include coverage for:

• Physical damage
• Medical payments
• Hired auto
• Uninsured motorist
• Underinsured motorist

Umbrella Insurance

Umbrella insurance provides coverage for claims exceeding your liability limits. It's designed to protect against high losses when an underlying policy's policy limits are used up. For a business, an umbrella policy offers protection above auto and general liability policies.

Errors and Omissions Insurance

If your business also involves services like designing products, giving advice and making recommendations, customers could sue you for not performing your job correctly, therefore harming them. Professional liability insurance will cover these situations. The policy will also pay legal defense costs, even where there was no wrongdoing.

Cost of Contractors Insurance

The cost of your contractors insurance will depend on the specific trade or industry you need to protect. Some contracting businesses are considered higher risk than others. For instance, a construction contracting business will pay more for insurance than a lawn care service provider due to the higher risk exposure.

Besides the specific trade, other common variables that weigh into the overall cost of business insurance include:

• Your business location
• Size and condition of your business premises
• Number of employees
• Coverage limits for your policies
• Claims history
• Number of vehicles owned
• The number of years you've been in operation

Comparing quotes from multiple providers will help you understand how much you'll pay for business insurance. Most insurers will provide a no-obligation quote upon providing your ZIP code. Besides comparing quote prices, you may also help keep your premiums low by buying a bundled policy, choosing a higher deductible and improving the safety of your business.

Here is a cost breakdown for the median premium for various types of contractor insurance policies:

How Contractors Insurance Works

Insurance companies don't provide a policy called contractors insurance. Instead they offer a group of policies to cover the diverse risks contractors face in their line of duty. For instance, many contracting firms require general liability to protect against 3rd party claims for bodily injury or property damage.

Other types of individual policies sold by insurance providers include commercial property, which pays for the replacement or repair of damaged business property, commercial auto to cover business-owned vehicles and workers' compensation insurance to protect you from claims of employees who are injured or fall sick in their line of work.

Insurance providers may also offer essential coverages at a discounted rate by bundling insurance in a business owner's policy (BOP). A BOP typically combines general liability and commercial property insurance in 1 convenient package.

You need to consider your business risks when assessing the types of insurance your business should carry. It's just fair to say that a construction contractor faces different risks compared to a janitorial contractor. You should also understand the laws governing business insurance in your state. Some insurance policies are not mandatory in some states.

Working closely with an insurance agent or a representative from the insurance company will help you purchase policies that match your business needs and risks.

Keep Your Contracting Business Protected

Your contracting business isn't immune to workplace risks and the right business insurance is crucial to your firm's growth and sustainability. Business insurance products can keep your enterprise protected if a claim is filed or a lawsuit is launched against your business.

It's essential to protect your livelihood with sufficient coverage and limits that match your risk exposure in case your venture is threatened. Start by obtaining quotes from our recommended insurers. It's never too soon to protect your contracting business.