Most contractors are familiar with license bonds since many states require them in order for the contractor to be licensed. License bonds are NOT insurance as they serve as protection for your customer, not for you, the contractor. There are many different types of contractor’s insurance, including general liability insurance, worker’s compensation insurance (also referred to as workman’s comp), commercial auto insurance, builder’s risk insurance, equipment and tools insurance, and much more. If you don’t already have contractor’s insurance read on to learn the top three reasons why you need it.
1. Get on the Job
It has become more the rule than the exception that you show proof of liability insurance when you are bidding for a job. Almost all government agencies and most general contractors will require that you carry general liability insurance. If you are unable to show proof of this coverage with acceptable limits (usually $1 million/occurrence), you will likely lose out on that job.
2. Protect Your Assets
Whether due to human error, faulty materials, or weather-related incidents, accidents and injuries occur on construction job sites every year. Even with the most careful planning, getting involved in a court case with a client at some point in your contracting career is generally not a matter of if, but when. Additionally, as an employer you are held liable for the occupational injury, sickness, or death suffered by anyone you hire. Whether your business is at fault or not, the cost of a defense against a lawsuit can be devastating – and often significantly higher than the actual property or injury damages.
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Commercial General Liability (CGL) insurance and workman’s comp insurance were developed to provide protection to businesses for expenses of injuries to others and property damage. Don’t risk everything you’ve worked for! If you don’t have contractor’s insurance and someone files a lawsuit against you, you could not only lose all of your company’s assets, but your personal assets too. Protect yourself against lawsuits with contractor’s insurance.
3. It’s the Law!
In many states contractors are required by law to have commercial general liability insurance before they can even bid for a particular job, or at the very least they must disclose to homeowners whether or not they carry contractor’s general liability insurance. If you disclose to homeowners that you don’t have contractor’s insurance, they are likely to choose another contractor.
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