Every contractor and their business is susceptible to certain risks which may be beyond their control. Although most will put up safety measures and precautions to ensure they are protected against any of such risks, the best form of protection or precaution to have is insurance. This is because even with the best safety measures, you cannot determine or tell what will happen.
While an insurance policy does not particularly prevent an incident from happening, when and if it does happen, it mitigates the effects on you and your business so that it is not adversely affected.
Having contractors' liability insurance is therefore something that every contractor needs and cannot do without. Examples of claims that this type of policy will cover include:
- Bodily injury
- Damage to property
- Personal and advertising injuries
- Product and completed operations as well as
- Medical payments.
A common mistake companies tend to make is to assume that general liability covers all their insurance needs. This is not the case. It does not cover:
- Negligence
- Theft
- Automobile accidents
- Criminal prosecutions
- Intentional damages or
- Contractual liabilities.
Also, workers on the project or those that belong to the company are not covered. It is strictly for third party claims. That is, claims involving people not directly related to the company or project. All of these are covered under different policies.
Why You Need a General Liability Insurance as a Contractor
Anyone can be sued for any reason and at any time. As a business owner, you do not want to be in a position where your company is sued and you have to pay legal fees and damages that may run into several thousands of dollars or much more from your company resources.
Below are some reasons why it is critical for your business:
It Protects You and Your Business
As mention above, you or your company can be sued for any damage or injury to a third party not related to your business. Getting a general liability helps take care of any legal fees, medical treatments, or repair that may need to be done so that you can focus on your business. In essence, it safeguards your business against going bankrupt or getting into financial trouble and debt.
It May Be a Requirement by Law
Some states require that contractors in certain industries must have various kinds of insurance of which general liability may be one. So depending on the state where your company is located, it may be compulsory that you own a general liability coverage. Also, when bidding for a project, it is almost always a requirement.
It Is Always Required by Clients and Vendors
You will always have to work with different clients and other companies. Most will request for your policy before they sign a contract or work with you. They do want to protect themselves too in the event that any accident happens.
You can read more about general liability here.
Buying Affordable General Liability Insurance
General liability is more affordable than many contractors and business owners think. The cost can vary based on factors such as the kind of business that you do and its size or even your location.
Some companies give flexible options depending on the financial standing of your business. Whether you have good or bad credit, you will be able to find a program that will suit what you need. This is especially true if your cash flow is good. With this, you can always find competitive financing from such insurance companies.
You should also know that if a situation arises where the policy you purchase is not enough to cover the claims against you, there is the option of purchasing extra coverage to add to the main policy.
Sometimes, all your insurance needs can be bundled into a business owner's policy (BOP) which makes it more affordable than buying each policy separately. It is up to you to decide if you prefer this or if you want to buy them separately. All you should do is ensure that whatever policy you purchase does cover all the risks that you will likely face.
Conclusion
The importance of an adequate insurance cover, especially general liability to a contractor, cannot be overstated. It comes with several advantages for your business and you do not have to break the bank to get one. Talk to your insurance company or agent and find out the various options that are available to you based on your company size. You may be surprised at how affordable it can be.
