The Need for Contractor Liability Insurance
In some ways, contractors are left out in the wild. Employment laws such as worker's compensation don't apply to contractors. But this shouldn't be taken as a signal to overlook contractor liability insurance, whether you're a business operator with contract workers or a homeowner who just contracted someone to do work on your house. You want to hire contractors who have the coverage that will protect you from liability related to on-site or on-job accidents, products sold by the contractors, and other forms of liability, including contractual liability. For contractors, that means contractor liability insurance is advantageous for you from a business perspective. You need to find a good policy at the right price.
Does My Contractor Need Insurance?
Yes. Neither worker's compensation nor employers liability insurance will protect you from liability for a contract worker. If a worker under contract for three weeks falls off a ladder in your warehouse while stocking shelves, that worker may decide to sue you for medical expenses, negligence, lost income, etc. If you sign a contract for someone to remodel a room in your house, and one of the workers is injured from a structural defect in your home, you want to be sure you're protected against a lawsuit. Lawsuits are all too common these days, and sometimes cost businesses and individuals millions of dollars.
As a Contractor, How Should I Proceed?
The short answer: purchase contractor liability insurance. Most of the time, this will be a prerequisite to compete for a job. If it's not, you'll still probably need a policy to perform the work. And you'll want enough coverage for any contingency. The more confident a business or individual feels about your level of responsibility, and their own protection from liability, the more likely they are to hire you. And don't forget, you never know the outcome of any lawsuit, or the ability of, say, a small business owner to pay for your injury or property loss, should that need arise. Your mother was always right: it's better to be safe than sorry. But keep in mind, a contractor liability insurance policy does not protect the contractor against poor workmanship or construction defects.
How Much Does Contractor Liability Insurance Cost?
There is no set cost. First, you need to decide how much coverage you want. You may opt for $500,000 in bodily injury and $100,000 for property loss. After that, your premiums will be controlled by factors such as the type of work you're doing, payroll expenses, and gross receipts. The problem plaguing many contractors recently is a steep rise in costs. Part of the reason is the high number of claims --which is also a door to lower rates for you. If you can afford a minor loss, and decide not to file a claim for that loss, you may save money in the long run through lower contractor liability insurance premiums. In any event, you'll need to search far and wide for the right policy, as many insurers are deciding not to renew, or to limit coverage, sue to the number of claims and lawsuits. Fortunately, this search is also the best way for you to find the most affordable rates. NetQuote.com is a free service that makes it easy to find potential insurers and compare their costs. Do the research, and the cost will definitely be worthwhile.
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