One of the most expensive errors that a building contractor can commit is skimping on business insurance. There are contractors who believe that if the category of insurance is not required by law, it is not necessary to get it.
However, without suitable coverage, contractors can find themselves being held liable for thousands of dollars that must be paid out as compensation for losses that result from unanticipated events or litigation. Below are crucial categories of business insurance for building contractors:
Workers’ Compensation Insurance
Some type of workers’ compensation insurance is required by most states to safeguard employees against medical expenses and lost wages that are caused by job-related injuries. In addition, this assists in protecting a company against lawsuits associated with those injuries. Premiums are typically dictated by the state; however, there are methods that can be used to potentially lower the costs associated with workers’ comp.
The best method involves lowering the experience modification factor of the business, which is a factor determined by the state. For this to be done, you will need to boost safety and subsequently decrease the severity and number of injury claims.
General Liability Insurance
General liability insurance is something in which every building contractor should invest. It safeguards your business against various liabilities, which include injury claims and ensuing medical expenses. Additionally, general liability safeguards your business against claims arising from damage that may be caused to the property of a customer.
It also provides coverage against damage resulting from a product you installed like improperly sealed doors or windows or faulty plumbing. However, general liability will not provide coverage for damages resulting from professional negligence. For this, another type of liability coverage will be required.
Professional Liability Insurance
Mistakes are made by everyone. Professional liability insurance provides coverage for inaccuracies in design or value engineering. It also covers modifications that take place in the shop that could cause a significant problem with a project.
In contrast to general liability insurance that covers property damage or bodily injury, this covers errors that could financially impact the project. However, only the liability of your error is covered, the cost of rework is not.
Cyber Insurance
Among the fastest growing categories of business insurance involves safeguarding the data of your company and that of your third-party vendors and customers. Business contractors more heavily rely on technology and as such, the need to safeguard streaming data is amplified.
Every building contractor should think about getting cyber insurance as small businesses are targeted by virtually half of all cyber attacks. Only 14 percent believe they would be highly effective at mitigating cyber vulnerabilities, risks and attacks.
Typically, cyber coverage is inexpensive and provides a decent layer of protection; however, it is vital to ensure you get the best type of cyber insurance coverage. Building contractors face unique risks and as such, different layers of protection are required compared many other categories of businesses.
Many building contractors hold the unfortunate belief that some of these categories of insurance are unnecessary. They suppose that most claims can be covered under the general liability business insurance. However, business insurance nowadays is particular concerning what will be integrated. No single type of insurance will safeguard a business against all categories of claims. Therefore, having a wide-ranging suite of business insurance is wise.