Liability insurance for contractors

Introduction

Liability insurance for contractors is one of the major classes of insurance. This is because of the enormous risks of the business of contractors. Although, the contractor business can be profitable, it is however with limitless risks. These risks emanate from the start of a project to its eventual execution. These risks can even lead to a contractor’s business shutdown. The risks come from struggling to meet project deadlines, machinery and property damage, workforce issues and so on. It is in the bit to protect yourself and business as a contractor that brings about liability insurance for contractors.

Meaning of Liability Insurance for Contractors

Liability insurance for contractors is a class of insurance policy that provides coverage for contractor’s businesses as well as employees against accidental loss, perils, etc that occur in the course of their job. These perils worthy of insurance cover can depend on the insurance company or providers, and may include but not limited to property damage, bodily injury and personal injuries as well as third parties liabilities.

 What liability insurance for contractors cover

1. Injury coverage

Contractor liability insurance provides insurance coverage with respect to expenses that arise as a result of injuries that occur in the course of work. For instance, injuries resulting from a fall of an Insured Person or a third party as the case maybe. In this circumstance, the insurance company will take care of any medical bills/ or other third party liabilities.

Similarly in extreme circumstances where death results, your insurance company will take care of the funeral expenses. However, this does not normally provide coverage for injuries incurred by the business owner or employees.

2. Damage coverage

Liability insurance for contractors equally offers you coverage in the event of damage to your neighbour’s property. Sometimes your employees may inadvertently damage your neighbour’s property and there will be a need for repairs or replacement. Similarly, the coverage can as well extend to compensate your customers if they are unable to make use of their property during the reconstruction or construction period.

3. Product claims

Most times, contractors engage employees to install or fix equipments or appliances on properties. And sometimes these installed equipments cause damages and cost liabilities sets in. liability insurance for contractor sets in to offer you protection and the insurance company pays the indemnity that will be able to cover the liability cost or a majority of it depending on the terms of the insurance policy.

4. Personal and advertising

This aspect of coverage provides protection in the event of liability against the policyholder-contractor for injuries resulting from malicious prosecution, infringement of copyright,  false arrest, malicious prosecution, wrongful eviction, publication of false information as well as liability arising from violation of people’s right to privacy.

What liability insurance for contractors does not cover

Liability insurance for contractors will not offer insurance coverage in the event of Intentional damage to third parties, Vehicles, Damage to projects during construction, Lost or stolen equipment as a result of carelessness, Injuries incurred by employees during the construction etc.

Additional add-on coverage in liability insurance for contractors

There are several additional or add-on coverage a contractor can buy that will help in safeguarding his business against perils that are not covered under the major or general liability insurance for contractors. However, these optional add-ons coverage and its terms highly depend on different insurance company in question. Below is some liability insurance coverage for contractors as add-ons.

Contractor’s tools coverage

This class of add-on will provide coverage or protection to the most times expensive tools of the contractor. The essence of this kind of coverage is that the contractor’s construction tools are very important and therefore worthy of protection.  They are equally and most times very costly to buy as well as to maintain. Contractor tools add-on affords protection to the contractor’s working equipment from damage, theft and even repair. And in the event of any of these incidents, the insurance provider will step in to provide indemnity in accordance to terms of the insurance policy

Business income protection

This type provides coverage in the event of loss of income as a result of contract termination or suspension.

Employment liability coverage

Sometimes, employees drag contractors to court for whatever actionable reason.  For example, discrimination, wrongful termination of employment, harassment, etc. This legal action may result to some legal liability against the contractor. In these circumstances, the liability insurance will step into provide indemnity. This is because the legal fees can most times be high.

Marine hazard coverage

This class of add-on offers coverage for shipping of products and materials and the damages that result from so doing.

Loss of information coverage

Most times, hackers break into website of contractors and thereby stealing sensitive information therefrom. This type of liability coverage provides coverage to contractor business information from lost. The coverage or indemnity in this circumstances maybe in the form of notifying the affected parties or good faith advertising but not limited to it.

Benefits of contractor liability insurance

There are a lot of benefits for buying the liability insurance for contractors and some of them includes;

1. To obey a legal requirement: in some jurisdictions, buying this class of insurance policy is a compulsory requirement of law. In these places, it is compulsory that you must have liability insurance for contractors to enable you to operate.
2. Client satisfaction. Sometimes, a contractor’s client will insist that he buys a liability insurance before a contract is approved. In this sense, this class operates to satisfy a client’s need. This coverage assures the client that the project will be fully executed not minding whatever challenge that may arise in the future as the insurance provider will step in to provide coverage or indemnity.
3. Provision of protection against damage to property or injuries to employees and third parties
4. It affords protection against legal liability as a result of law suits against the contractors from employees or even third parties.
5. Peace of mind.
6. Liability insurance will enable your contractor business flourish without hindrances as a result of adverse claims from third parties and employees for damages done to them as the insurance provider will always step in to provide indemnity.

What is the cost of contractor liability insurance?

There are some factors that determine the cost of liability insurance for contractors and some of them include;

The level of coverage:

the level or extent of insurance coverage is one the major determinants of the cost liability insurance for contractors. For instance, the amount a policyholder pays for two coverage items will differ from that for five coverage items.

Environmental factors:

as we all know some contract sites or location may pose more threat than another. Thus, the more the risk with link to the location the higher the premium that will be payable in buying this class of insurance policy. For example, a contractor with a project in an environment that is more prone to bad weather conditions will pay more premiums than the one in a less dangerous environment. This same scenario applies to locations with treats of insecurity and the one that does not have.

Frequency of Claims history-

Insurance companies will usually check how frequent your claim history is in determining the cost of your contractor liability insurance premium. To this end, an insurance holder with more claims history will pay more than the one with less. The implication of regular filling of claims is that they are exposed to a higher risk than those who barely make claims.

The nature and number of contractor machinery:

the Contractor’s machineries are always of different types and highly expensive. Therefore, the more they are expensive and many, the higher the premiums payable.

Number of contractor’s employees-

A contractor with many employees will be more prone to risks such as damage to third parties’ properties than the ones with lesser number of employees.

How to reduce the cost of;

By buying insurance policies from one insurer, you will get better rate than buying each cover from different insurers. Therefore, bundling your insurance policy will certainly reduce the cost of premiums

Secondly, you must desist from filling unnecessary claims. This is because making too many claims may make you seem riskier to insure, hence raising the cost of your premium.