You need insurance for your construction business, but you don't want to spend too much or too little on it.
If you're paying too much for your contractor insurance, you're tying up cash that you could use to help your business grow. But spend too little, and you may be sacrificing coverage -- and there's nothing worse than finding out after-the-fact that you don't have enough coverage if something goes wrong.
Contractor Insurance Dos and Don'ts
These contractor insurance dos and don'ts can help you find the sweet spot between protecting your assets and freeing up your cash.
Contractor General Liability
Do: Start with this Essential Coverage
Contractor general liability should be the foundation of your insurance protection. This must-have coverage covers you against third-party injuries, damage to other people's property, and even advertising damages.
Don't: Omit Work
Failing to disclose all of the work you undertake could invalidate your coverage. When you apply for a policy, be sure to disclose all the work you do. For example, if you're a general contractor who also does roofing work, be sure to tell your insurance broker about it.
Do: Obtain Workers' Comp for Any Employee
Workers' compensation insurance is often required by law, even if you only have a single, part-time employee. Workers' comp will cover the costs of medical care or missed work if your employees get ill or injured doing their jobs.
Don't: Mis-Classify Employees
Trying to get around workers' comp requirements by improperly classifying employees as sub-contractors can land you in hot water. Fines and jail time are some of the consequences you could face if you misclassify your employees. Don't try and game the system; protect and do right by your workers, instead.
Do: Carry Commercial Auto for Your Work Vehicles
Commercial auto insurance is designed to protect the vehicles that your construction business owns and uses to get the job done. You'll want commercial coverage if you use your vehicle for work purposes or for any vehicles owned by your business.
Don't: Rely on Personal Auto Coverage to Protect Work Vehicles
It's very common for contractors to have double-duty vehicles: it's your work truck Monday through Friday but your personal truck on the weekends, for example. If you only have personal coverage on your vehicle and get into an accident using that vehicle for work purposes, however, your claim could be denied, and your policy canceled.
Cyber Liability Insurance
Do: Audit Your Cyber Risks
Cyber liability coverage may sound like an insurance policy for web-design companies or software developers, but it's actually an essential coverage for any business in today's digital world. Even in the construction industry. Remember the much-talked-about Target data breach? The $200M breach was a result of stolen credentials from a third-party HVAC vendor.
Don't: Assume You're Too Small for Cyber Protection
Big corporate breaches like the above-mentioned Target attack make the news, but it's the little guys who are more often victims of cybercrime. 47% of small businesses were hit by cyberattacks last year, a 33% increase from the previous year.
Inland Marine (Tools and Equipment Coverage)
Do: Protect Your Tools and Equipment
Your tools and equipment are on the move from one project site to the next, and that makes your high-dollar hand tools and specialty equipment vulnerable to theft, loss, and destruction. Inland marine coverage protects your equipment while it's on the go.
Don't: Rely on Property Insurance to Always Protect Your Equipment
Commercial property policies are designed to protect businesses' equipment that remains on the property. But most commercial property policies don't follow your equipment around if you've got it on the move.
Be sure you understand the limitations of a commercial property policy to see if the additional coverage of inland marine insurance will best protect your tools and equipment.
Do: Protect Your Investment in a Project
You invest a lot in a project before you complete it: materials, labor, and time. Builders risk coverage protects these investments in the event of a loss while the project is still under the course of construction. If a fire breaks out and wipes out your progress, builders risk insurance can help you get back on track.
Don't: Misunderstand Your Policy Coverage
This one's important for any contractor insurance policy, from builders risk to general liability and everything in between. Take the time to understand what each of your policies cover and what each policy excludes, as well. You don't want to find out the hard way that you had a giant hole in your coverage that easily could have been filled.
Do: Get Covered
This may sound like a no-brainer, but do make sure you're protecting your construction business with contractor insurance. Failing to have insurance on hand means you could be paying out-of-pocket when the unexpected occurs. At worse, not having the right coverage in place could put you and your business in legal trouble, too.
Don't: Put it Off Until Tomorrow
Accidents won't wait. There's no telling what tomorrow brings: it could be wildfires, bizarre weather, employee injuries, distracted drivers, or a theft/ vandalism you never saw coming.
The contractor insurance professionals at Aegis Insurance Markets know exactly how much coverage you'll need to ensure you've got the perfect amount of insurance to protect you from the risks of your trade.
Get a free online quote for contractor insurance today and we’ll help you find the sweet spot: the right amount of coverage at the right price for your business.