General Contractors Insurance

You're a general contractor. You spend long days on the job site, managing your crew, keeping them on schedule, and ordering the materials you need to complete the project. You have more than enough to worry about when you work. You don't have the time to think about insurance, and even if you did, you're convinced it's not worth the hassle. After all, you have workers' compensation insurance, which should be sufficient, right? Wrong!

General contractors like you need to protect themselves from risk. You work in dangerous environments, with more than a few hazards to concern yourself with. Construction isn't for the faint of heart, and dangers can be found around every corner. You have to watch out for heavy machinery, bulky building materials, and falling debris. No one is completely safe during a construction project. You never know when disaster could strike, so don't take any chances, get the right amount of insurance for contractors ASAP.

Get Insurance, It's the Law!

In addition to being a wise investment, in most states, contractors are required by law to carry insurance. In some areas of the country, these requirements are relatively easy to satisfy, while in others, general contractors must carry multiple lines of insurance. Before you start a career as a general contractor, make sure you have the proper insurance and that you have a plan in place that will ensure you're in compliance with all of the local laws. If you don't, you could be fined or banned from operating in that state. Insurance isn't just a good idea, it's the law.

Types of Insurance

In most states, general contractors must at the very least be able to show that they're covered by workers' compensation insurance. In New York, you must have workers' compensation, general liability, and disability insurance to operate legally within the state. You may also be required to purchase additional insurance if you're working on a project with a crane and other heavy machinery, or if you plan to build a structure that will be several stories tall. In New York and elsewhere, the insurance you need depends on the type of work you plan to complete and the area of the state and country in which you're located. Regardless of the requirements, it's smart to insure yourself against as much risk as possible. Here are a few of the policies you should consider if you're a general contractor:
General Liability

These policies vary, but they typically cover claims that involve bodily injury, personal injury, and property damage. This isn't intended for your employee's injuries, those will be taken care of by your workers' compensation insurance. General liability protects you against injuries or property damage that your work or your employees caused to another person and/or his/her property. Most states require general contractors to have this to legally work, but even if your state doesn't, it's wise to do so. You don't want to get caught with a multi-million dollar claim without the proper coverage.

Commercial Auto Insurance

If you're the boss and you own a business, you may have company vehicles. Make sure these are insured, especially if you park them on or near the work site. You can't predict accidents, and you don't want to have to replace your truck if one of your employees drops a steel beam on the hood.

Workers Compensation Insurance

Like general liability insurance, your state will most likely mandate that you have workers' compensation insurance. You may be exempt from carrying it if you satisfy an exception or if you work alone and only hire subcontractors who are not your employees. If you own a business and have employees under you, you most likely will need this.

Umbrella and Excess Liability Insurance

Construction accidents can be catastrophic. If one of your employees destroys an expensive piece of equipment, or if a third party is critically injured by your work, your base general liability insurance policy may not cover all of the losses. Excess insurance will give you the peace of mind of knowing that you're covered in even the most extreme situations.

Property Insurance

If you're working on property you own, such as a building or a home, it's a good idea to insure it before you start your work. If your property is damaged, you may be able to cover some or all of the costs if the property is insured. You can also purchase property insurance when working on someone else's property. This will take care of damage caused by you or your employees while someone else's property is in your care, custody, and control.

Contract Surety Bond

Yes, a bond is different than an insurance policy, but they're both tools you can use to protect against risk. As a general contractor, you'll be asked to sign more than a few contracts. Many of them will be extremely complex and detailed. You want to fulfill your commitments, and you depend on the subcontractors that you hire to do the same. If one of your subcontractors fails, you'll need to find another person to complete that part of the project. When a general contractor buys a contract surety bond, also known as a performance bond, they're paying for the guarantee that if one of their subcontractors is unable to complete the project in accordance with the requirements laid out in the contract, the surety company will find someone else who is capable to finish the remainder of the work. This will save you time, money, and stress when one of your subcontractors backs out of a job.

Owners and Contractors Protective Liability

If you plan to hire a general contractor to complete a project you own, you should consider owners and contractors protective liability. This will shield you if your failure to properly supervise, manage, or instruct the contractor you put in charge results in damage to property or personal injuries.

Environmental Insurance

Environmental concerns should be paramount on all projects, especially if you're dealing with a particularly vulnerable area. In some states and on particular jobs, you may be required to show that you have environmental insurance before you begin. This is due to the fact that some construction projects can damage local wildlife and ecosystems, and many of these accidents are expensive to clean up.

Builder's Risk Insurance

General contractors generally must supply their workers with equipment. Property insurance will help you replace damaged or destroyed equipment, but only if your equipment is on your business property at the time it's damaged. If you're working on a client's property, you likely will have to pay for the losses yourself. Similarly, if you're working on an addition to a home or business and that addition burns down before you're finished, under most property policies, your losses won't be covered. Builder's risk insurance will provide you with an extra layer of protection for your equipment and the property that you're building.

Errors and Omissions Insurance

E & O Insurance, also known as professional liability insurance, will protect you if you make an error and that mistake causes damage to property or injures another person. If you're a general contractor and you're building a garage, you need E & O insurance to ensure you won't have to pay out-of-pocket if the garage collapses or is later needs to be reconstructed because of your errors. Contractors who work on electrical and plumbing projects will particularly benefit from E & O Insurance. If a pipe fails and floods a house or if an electrical outlet causes a fire, you want to be covered. In many circumstances, E & O could be the only insurance policy capable of keeping your company in business.

Property In Transit Coverage

When you travel to and from job sites, you'll want to know your property is protected. Heavy machinery, building materials, and tools aren't cheap. Property In Transit Coverage will help you replace and repair equipment that's damaged while being transported.

Equipment Coverage

Construction equipment isn't cheap. When you're working on a project, you, the general contractor, will be in charge of supplying the equipment. You don't want to be on the hook if one of your tractors, jack hammers, or other expensive equipment breaks. Unless you have tens of thousands of dollars stashed for just this occasion, you likely won't be able to just go out and buy new equipment. Even if you do, you don't want to spend all of the money you have saved on one project. You must take good care of your equipment if you want to stay in business. Don't take a risk, look into equipment coverage for your tools and machines.

Business Owners Policy

If you're both a general contractor and a business owner, a business owners policy may be right for you. Not all insurance carriers offer this, but more and more carriers are starting to sell it. This is a three-in-one insurance package, in which you get workers' compensation, property, and general liability coverage for one price. The business owners policy may be preferable for some, but it may be overkill for others. Understand your needs and choose the policy that's best for your business and your budget.

Completed Operations

When your project is completed, you can't let your guard down. If you or one of your employees damages property or causes a bodily injury to someone else after all the work is done, you may still be liable. Completed operations insurance will give you an extra layer of protection when you're done with the majority of your project, but still need to complete the final walkthrough.

Loss of Income

When your project stops due to a covered loss, the insurance will pay out the benefits in accordance with the policy, but they won't pay you for the wages you're likely to lose over this period. Loss of income insurance will pay you the wages you would have earned, but for the covered loss. This way, one policy will pay for the covered loss and the other will pay you back for your wages. You won't to worry about paying bills if your project falls apart. You're project will be taken care of and so will your salary.

Cyber Security and Identity Protection

It's difficult to work as a general contractor without an online presence. In 2017, you ignore social media and the internet at your own peril. Digital marketing is essential today, but you have to protect yourself against hackers and people who want to do you harm.

Ordinance Insurance

Federal, state, and local laws can affect the property value of your project. Ordinance insurance will ensure you won't pay more when a change in laws results in an increase in your property value or makes it necessary for you to pay more in fees than you had to pay when you started the project.
Don't Take Unnecessary Risks; Be Sure, Insure

The life of a general contractor is hard enough as it is. Don't create additional risks and worries, buy the insurance that's right for you and your business. If you don't have the proper insurance, you could lose your license, ruin your reputation, or you could be forced to pay fines and expenses that could bankrupt you and run you out of business. Don't take any chances, buy all of the insurance you need.

If this isn't reason enough to buy insurance, consider also that many businesses won't work with you if you can't prove that you have the proper insurance. Businesses, real estate owners, and investors want to do everything they can to ensure the project turns a profit. They are serious people, and they don't want to worry about you not living up to your promises. They won't even work with you if there are any doubts that you may not perform. If you want to work with the best, you need to work like the best. That means you need to protect yourself from risk. You won't even get a chance to work with many of the top developers if you don't have the proper insurance.
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