A contractor will face a variety of liabilities over the course of their completing projects for their clients. However, it is possible to greatly mitigate this threat by using contractor's insurance to provide protection against the liabilities that you may encounter.
Does A Contractor's Insurance Policy Always Cover Worker's Compensation?
Depending on the size of your contracting operation, you may be required to purchase worker's compensation to cover those working under you. However, it should be noted that this is not typically a standard inclusion for contractor's insurance. Rather, these policies are designed more to protect against general liabilities, such as damage to the owner's property. A separate worker's compensation policy will be required to protect your workers against the costs of being injured on site.
How Does A Contractor's Insurance Policy Differ From Bonds?
As part of the process of obtaining a license, contractors will usually be required to purchase a bond. This bond will protect their clients in the event that they fail to complete the project or that they otherwise cause damage or make costly mistakes. While bonds can provide invaluable protection, they are very different from insurance. With an insurance policy, the insurance carrier will pay for the damages that occur for covered claims. While a bond will also issue payment, you are obligated to repay the bondholder for the claim. Furthermore, the types of issues and projects that are covered with bonding will be more limited, which can be an important factor for those wanting comprehensive protection for their contracting work.
When Should You Reassess Your Contracting Insurance Needs?
Over the course of time, your contracting business may grow. In addition to the potential for hiring new employees, you may also take on new types of projects that will require specialized insurance coverage. These factors result in a need for you to be prepared to reassess your insurance needs on a periodic basis. At a minimum, you should reassess these needs whenever there is a change in your workforce or take on a new type of project for the first time. These situations can represent instances where your insurance needs are the most likely to change, and reviewing your policy can help you to stay adequately protected. Furthermore, it may be wise to review the costs of competing insurance policies every year or two so that you avoid situations where you are overpaying for the amount of coverage that is necessary for comprehensive protection.
After we had kids, we realized that we needed to up the ante on our insurance coverage. While we had a policy in place, I knew that we had to do something to make sure that we were protected in any instance, which wasn't the case at the time. I began talking with different brokers about what we could do to improve our coverage, and they had some really great suggestions that seemed to help. This website is here to help other people to know how to purchase insurance, and what kinds of policies would work best for your special family.