Business Insurance for Contractors

Lucy Lazarony November 3, 2020

Contractors, subcontractors and independent tradesmen all need to carry business insurance for their large and small businesses. This type of business insurance will protect their business from large financial debts that can result from work-related accidents. And this business insurance will protect them against lawsuits and other liabilities. Not only does this business insurance protect a business, it is often a requirement from many employers before doing business with them. Here is a look at business insurance for different kinds of contractors.

Electrical Contractor

For electricians, business insurance protects them against what could be devastating financial losses caused by injuries, property damage and other common risks.

How much does business insurance cost for an electrical contractor? Factors such as contractual requirements, the number of employees and other job-related exposures all can affect the cost of insurance.

For example, an electrical contractor who needs $15,000 in personal property protection to cover expensive tools will pay more than an electrical contractor who only needs $5,000 in coverage.

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What Basic Coverages Should an Electrician Carry?

A commercial general liability policy protects against lawsuits and other financial liabilities that may result from a wide range of accidents including a fire caused by faulty work.

For an electrical contractor, commercial auto coverage is typically needed if they use their vehicle to transport work supplies such as parts, testing equipment and other tools. Cargo vans and pickup trucks can all be covered with a commercial auto policy.

Depending on the size of the business, an electrical contractor may want to consider a business owners policy. This policy extends general liability coverage to protect things such as commercial buildings and personal property.

For electrical contractors with employers, workers’ compensation is a must and required by law in most states. Workers’ compensation offers insurance coverage for when employees become ill or injured while on the job.

Excavation Contractor

Excavation contractors excavate lakes, ponds and parking lots and they do site clearing. Before any construction, the site must be surveyed and cleared. This can consist of demolishing existing buildings and old infrastructure and this also means clearing any vegetation and trees. Excavation services are necessary to build foundations for buildings, run underground cables and build roads and sewers. Excavation contractors likely own or lease heavy equipment. Having business insurance coverage for their excavation work will help to protect their business financially if an accident occurs or if property is damaged.

What Insurance Should an Excavation Contractor Buy?

Commercial general liability insurance will protect their business if they physically injure another person or cause damage to someone else’s property.

Excavation can be hazardous and most clients will require excavation contractors to carry commercial general liability insurance in order to be hired for the job.

Because excavation has a higher rate of injury than many other professionals, it is important for excavation contractors to have workers’ compensation for their employees. Workers’ compensation pays for medical expenses for employees who are injured on the job.

Commercial auto insurance protects their business if one of their employees causes injury or damage to someone else while driving the business vehicle. It also protects vehicles owned by the business from damage or theft.

Mobile equipment insurance provides protection for mobile equipment that is commonly stored on client sites or outside the business premises. This insurance protects loaders, excavators and bulldozers from theft, accidental damage, fire, windstorms and vehicle crashes.

HVAC Contractors

HVAC contractors are heating, ventilation and air conditioning contractors. They keep customers’ homes warm, cool and free of excess water and dangerous gas.

But the job can cause injury to HVAC employees and residential and business customers can become injured and property can become damaged. Whether doing installation work or handling repairs, HVAC contractors face a wide range of property damage risks. And that’s why they need business insurance

A commercial general liability policy would help protect them from financial damages. This type of policy could help pay for injuries sustained at job sites and for property damage, HVAC installation problems and moisture damage.

And if they drive their vehicle to job sites and carry supplies such as ducts, air conditioners and tools, they will need a commercial auto policy. Cargo vans, box trucks and trailers can all be covered under a commercial auto policy.

If HVAC contractors have employees, they will need to buy workers’ compensation. Workers’ compensation covers employees’ medical costs and a portion of their lost wages if they should become sick or injured on the job.

Flooring Contractors

Flooring contractors install flooring such as tile, linoleum, hardwood and carpeting for homeowners and general contractors. They work in new or existing buildings.

A big part of their insurance coverage is liability insurance. A commercial general liability policy will protect their business’ financial interests in the event of a liability lawsuit. This insurance would cover legal defense fees, court costs and financial damages. Commercial general liability insurance also would cover injuries and property damage caused to third parties while doing floor installations. It includes product liability insurance and protects their business if a flooring recommendation proves to be sub-par and causes damages or injuries to others.

If flooring contractors use vans or trucks to transport tools and other supplies to and from work sites, they should have a commercial auto policy. Commercial auto insurance policies have higher liability limits than a standard auto insurance policy would and are a good, protective policy for flooring contractors transporting equipment.

If flooring contractors have a staff of employees, they should offer them workers’ compensation, which will cover employee medical costs and a portion of lost wages should they become sick or injured on the job.

What Is Needed for a Business Insurance Quote?

A contractor will need to share their business location and industry, owner information and experience, details of business operations and gross annual sales. The details of their daily business operations and where they conduct business are both considered when assessing a contractor’s exposure to various risks. If a contractor has employees, the contractor will need to provide the number of employees, annual payroll and subcontractor costs for the insurance assessment.

When receiving a business insurance quote as a contractor, be ready to discuss claim history, such as the number of claims in the past five years, date of claims and amount paid to settle each claim. Once contractors choose business insurance policies for their businesses, they should be sure to review the policies in the upcoming year. Was the policy what the business needed after all? Or should they renew or expand the policy? Talk over the details with an insurance professional. An optimum and affordable policy is key.

Travel Insurance for Contractors

Overseas military contractors enjoy financial benefits such as free or subsidized housing and per diem allowances. But they are on their own when it comes to travel insurance. Medical evacuation insurance can take care of most of the cost of air emergency transportation. These policies include benefits such as term life insurance, trip cancellation and lost luggage insurance. Travel health insurance substitutes for a contractor’s stateside insurance coverage for things such as checkups and lab tests. Travel health insurance reimburses for both medical and dental costs and offers evacuation coverage and travel services.

Most contractors who will be overseas for less than six months purchase a single trip travel health insurance plan. The premium is due upfront. Other multi-trip policies also are available if needed.

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