Starting a new contractor business can be a thriving experience, especially if you already have made many business contacts in your market. But to avoid costly lawsuits, it's imperative to secure the right insurance for your specific contract work. Here are essential points to know about insurance for your new company.
There are three main types of insurance you likely need for your new contractor business: contractors liability, commercial auto coverage, and workers’ compensation. Beyond these three types of insurance, you may need additional coverage depending on the risks your business poses to yourself and others.
First, you need contractors liability, which pays for damage or injuries you cause to other people. Many contractors carry general liability coverage to pay for a wide variety of legal costs and settlements to third parties. But they also add extensions to cover risks that reflect their niche.
Second, you need auto insurance if you plan to operate a company vehicle or a fleet of vehicles. All states require this insurance for all drivers, whether it's for personal or business use. There are various types of commercial auto coverage, so make sure you pick the plan that matches your business needs.
Workers’ compensation is the third type of insurance contractors need if they hire employees. This state requirement pays for accidents or injuries that happen to employees on the job. The plan can also pay for lost wages and for long-term disabilities.
All contractors with employees need general liability and workers comp as core commercial insurance, along with commercial auto coverage if they own vehicles. If you plan on getting a conventional bank loan, you will be expected to provide proof of insurance to lenders. You should make sure business partners you subcontract with also carry the proper insurance.
The world of contractors is very diverse, as it includes builders, electricians, HVAC specialists, and many more professionals who install items to structures. Make sure your coverage matches the work you do since general liability insurance alone may not be enough to cover the main areas of your trade. It's important to ensure your means of production - which include tools and equipment - are covered in case of theft, vandalism, or a natural disaster. Contents coverage pays for these losses.
If your company does construction work, you should consider the builder's risk coverage, which protects your business against losses that result from problems with labor or equipment. The coverage can also pay for disasters that disrupt the completion of a project.
Another form of coverage for contractors is through surety bonds. In this scenario, you agree with your customer and the guarantor that contract work will be completed at a fixed rate. Since there are different types of bonds, it's helpful to work with an expert who can help you make the right choice for your business.
Finding the right insurance for your new contractor business comes down to working with experienced professionals and customizing your policy. Contact us at Humble Insurance Group to discuss your coverage needs. We are ready to help simplify your search and ensure your coverage accurately reflects your contracting business.