According to a new report from insurance Quotes, almost two-thirds of construction companies believe that having an online policy portal is necessary to compete in the market. To remain competitive and keep costs low, it’s important for contractors to shop around for the best coverage at the best price.
Luckily, buying contractor insurance quickly and easily has never been easier. With so many policies available, finding the right coverage for your business takes just a few minutes.
The sooner you get started, the sooner you can start protecting your assets and making sure your business stays afloat financially throughout the project process. Here are some insider tips for how to buy contractor insurance as soon as possible.
Construction insurance is the umbrella policy that protects your business from multiple risks. It covers your assets, such as machinery and equipment, as well as any potential liabilities, such as personal injury or damage to property. Construction insurance is also referred to as risk management insurance or specialty insurance.
The cost of construction insurance depends on your risk profile, your policy limits and any add-ons you choose. If you’re a smaller contractor, you might be able to get an insurance quote with a smaller premium. If you’re purchasing a large, complex project, you might be able to get a lower rate by signing up for a large policy.
Construction insurance is a combination of several types of insurance. The major types of coverage you’ll find in this type of policy are property insurance, liability insurance, contractual liability insurance and workers’ compensation.
General Contractor Insurance
When it comes to purchasing contractor insurance, there are a few things you should keep in mind. One of the first things you should do is determine the specific risks your business faces. There’s nothing wrong with choosing a policy that covers the most common risks for your industry.
However, if you’re a construction company that’s laying down a swimming pool, you’re going to want a policy that allows you to cover the risk of falling into the fluid. The same goes for other types of specialized industries. If you’re a general contractor, you’re probably looking at coverage for properties and construction, so be sure to add the right endorsements.
Most contractor policies will provide basic liability coverage, but it’s important to understand the limits in place and make sure your business is adequately protected.
Residential Construction Insurance
When you’re ready to purchase contractor insurance for residential construction, you have a lot of options. Different insurance companies offer a variety of policies for home improvement contractors, so it’s important to shop around and compare prices.
Residential construction insurance can typically be classified as either homeowner’s or contractor’s coverage. Homeowner’s coverage is usually provided by the lender and protects the lender’s investment if there’s a loss. It’s important to note that it doesn’t cover you or your employees. It’s vital that you understand which type of coverage you’re purchasing. With homeowner’s coverage, you’re protecting the lender’s investment, and contractors can’t rely on it.
There are two main types of contractor coverage. One is construction contractor’s insurance, which has a general contractor classification. The other is specialized contractor’s insurance, which might be more suitable if you’re a plumber, electrician, HVAC contractor, etc.
Construction Insurance Coverage
Construction insurance coverage can help protect your assets and keep your business afloat in the event of a claim or lawsuit. Certain types of coverage, such as contractors’ liability insurance, are required by many states. It’s important to be familiar with your state’s contractor licensing and licensing requirements. Some states also have specific requirements for the types of insurance you must carry.
Construction Liability Insurance
Construction liability insurance protects your business from lawsuits involving injuries to workers and third parties on a job site. If someone is injured on your property, the courts generally side with the person who was injured. This coverage is required by many states, especially if you are a general contractor. Some states also require a certain amount of construction liability coverage.
How is General Liability Insurance Calculated for Contractors
General liability insurance protects your business against lawsuits by third parties. It covers any damages awarded to a plaintiff, such as medical bills, lost wages, property damage, etc. In some states, if you’re found at-fault in a lawsuit, you may also be forced to pay the plaintiff’s legal fees.
This type of policy also determines how much coverage you have. The general liability coverage amount ranges from $1 million to $5 million, based on your state’s minimum requirement. You can also increase your coverage with umbrella coverage.
General Contractor Insurance Requirements
In order to obtain commercial contractor insurance, you must be legally authorized to provide construction services. The policy must be in your name, and the company must be in good standing with its state business license.
You must also be a licensed contractor in the state you plan to operate in. Other requirements may include a copy of your business license, a copy of your insurance policy, proof that workers are qualified and a description of the project. Some states will also require an application.
Don’t wait to confirm you need coverage
The longer you wait to buy contractor insurance, the more likely you are to miss a policy that is expiring or end up without coverage at all.
If you wait and nothing else, confirm coverage. It’s important to review your coverage and the limits on the day you buy it or the policy will automatically renew each year.
This is also the time to ensure that your business is properly covered. Is all equipment and inventory properly covered?
Is there a risk of a major loss or damage to property? Are you fully protected against lawsuits?
Understand your options
The different types of coverage available in a commercial contractor policy can be confusing. If you’re unsure about which level of coverage you need, consult with your insurance agent or broker. Your broker can help you identify the best policies for your business’s risks and help you choose the best coverage levels.
There are also insurance tools available to help contractors compare policies and determine the best coverage for their needs.
These tools include:
- InsWeb – This online resource from the National Association of Insurance Commissioners (NAIC) is a comprehensive database that helps you find the right coverage for your business.
- Policy Analyzer – This tool from the National Council for Contractor Support Services (NCCSS) allows you to compare your business with other contractors and identify areas of risk.
- Risk Matrix – This tool from the American Institute of Architect (AIA) helps contractors determine the type of insurance coverage they need based on their business profile.
Keep records and track expenses
When buying contractor insurance, you may be tempted to focus solely on the price and coverage you need, but it’s important to remember that you also need to protect your wallet. Before you sign up for a new policy, take the time to review your current coverage and make sure you’re getting the most bang for your buck.
If you’re unsure about what coverage your company currently has, take a look through your old bills and receipts. You may notice that the contractor is listed as the owner of certain pieces of equipment.
This is a clear indication that you have general liability coverage. Keep track of your expenses as you’re building your project. You may notice that certain items, such as materials, are often charged to your business. This may indicate that you need extra coverage.
Comply with the due diligence process
Once you’ve selected your insurance provider and purchased your coverage, it’s time to make sure you’re properly protected. Your insurance policy should have a due diligence process that requires you to conduct a risk assessment and identify any gaps in coverage.
If there are gaps in your coverage, you may need to seek out additional insurance or make sure that assets are properly guarded. In some cases, it may be necessary to adjust your business’s risk profile or reduce the likelihood of a major loss.
The sooner you start researching and shopping for commercial contractor insurance, the sooner you can start protecting your assets and making sure your business stays afloat financially throughout the project process.
With so many different policies available, finding the right coverage for your business takes just a few minutes. The sooner you get started, the sooner you can start protecting your assets and making sure your business stays afloat financially throughout the project process.
Today, contractors need to be ready to protect themselves in the event of a claim. This means having the right coverage at the right price.