Topic: What is General Liability Insurance for Contractors?
What is General Liability Insurance for Contractors?
General liability insurance for contractor companies helps safeguard your business from liability claims arising from bodily injury or damage to another’s property. If you do not have the general insurance or business insurance for liability the business owner would be required the expense of paying out of their own pockets for any liability claims.
As a subcontractor, contractor, or independent tradesman, the chances of property damage or injury are very high in your field of work. To ensure that your company is safe from liability for accidental injuries or damage consider General Liability Insurance for Contractors.
What exactly is General Liability Insurance?
General Liability Insurance or Commercial General Liability (CGL) is financial security for a variety of situations where your business’s activities cause injury to someone else or their property. If your company is sued over a matter that is covered by your insurance policy, your insurance provider will cover your legal defense as well as pay any judgments or settlements against your business up to the limit of the policy.
For construction workers, General Liability Insurance is crucial, since a lot of the work they do could pose a significant risk to the property as well as to people.
What is General Liability Insurance for Contractor Cover?
General Liability Insurance for Contractors provides coverage to protect your business from accidental third-party injuries and property damages. Standard CGL policies usually cover third-party physical injury, property damage, and also personal and advertising injuries.
Bodily Injury insurance protects your business in the event of physical harm to someone else. A key exclusion is injuries to employees, which will have to be covered by workers’ insurance.
Damage to property insurance protects you from damages to the property of others that is caused by your business. A key exclusion is a property owned by someone else which is in your custody, control, or custody (e.g. the client’s kitchen you’ve been commissioned to renovate) This is covered by the additional endorsement that is commonly referred to as the voluntary damage to property. Voluntary property damage covers accidental damage to other’ property when that property is in your care or custody.
Products and complete operations protection ensure that you are protected after the work is completed. If the tasks your company has finished cause bodily harm or property damage, the company could still be held accountable.
One of the major limitations of coverage for completed operations insurance and other products is that you can only be covered if your insurance policy is in effect when the physical injury or damage to property happens.
Personal and commercial damage liability insurance covers specific kinds of physical harms that your business could cause to a business or individual. Contracting companies may encounter this most often in the case of libel, slander. Copyright infringement in advertisements, or publication that violates privacy.
Medical payments made to other people are a form of insurance coverage that pays medical expenses in the event that an individual is injured on your company premises or due to your business operations. Contrary to bodily injury protection that pays only when your company is found to be responsible the medical payment to other people will cover accidents, regardless of whether your company is at fault.
What Doesn’t General Liability Insurance for Contractor Cover?
One of the major exclusions in General Liability Insurance is an auto liability. Since car accidents are the main reason for liability claims, they’re not covered by Commercial General Liability Insurance. To adequately cover your liability for vehicles you use for work it is necessary to have commercial insurance for your vehicle.
Mobile Equipment –
As an independent contractor, you might have mobile equipment, such as forklifts or backhoes, which could be used on roads that are public. A crucial question to consider is whether or not the equipment is considered to be an auto and whether the equipment is covered by the Commercial General Liability Policy.
The answer is contingent upon the state of your residence and whether it has a requirement for auto liability insurance on mobile equipment. If your state doesn’t have auto liability requirements then the equipment will be considered to be mobile equipment and is covered by the Commercial General Liability policy.
If your state does have auto liability for the equipment, then that machine is required to be covered by commercial insurance for automobiles.
Certain Insurance policies do not cover subcontractors in liability insurance. For full coverage, you must make sure that any subcontractors that you contract with are covered by liability insurance that has the same limitations of liability you already have.
Ask for the subcontractor’s certificate of insurance that proves they are insured, and also ensure that the subcontractor is listed as “Additional insured” in their insurance policy. This obliges the insurance company of the subcontractor to protect you in the event that you are sued over work that was performed through the subcontractor.
If the subcontractor that you employ cannot obtain liability insurance, you may include them as “Additional insured” in the terms of your Commercial General Liability policy, which could result in an additional fee.
In this way, you will be able to cover the subcontractor for work they provide to your company however not for tasks they are performing for other clients.
What Does the Cost of General Liability Insurance Cost?
The median cost of General Liability Insurance for contractors is $1,074 annually which is based on smaller businesses that have less than $500,000 in annual sales. For contractors, it is important to remember the fact that cost for insurance typically increases proportionally (or more than proportionally) to the amount of revenue.
Furthermore, certain kinds of contractors, like general contractors or roofing contractors have greater risk-related exposures and could have premiums that are 2-3X the average, or even more.
Prices for General Liability Insurance are based on the specific risk your company faces. Insurance companies consider such factors as:
- Size of the business
- The number of employees
- History of claims
Firms with higher risks will be charged more as compared to those that are deemed less risky. For instance, amusement parks will likely have higher insurance premiums for liability than a graphic designing company.
The premiums will also increase as you expand the amount of insurance. Different insurance companies employ different ways of rating risks and it’s worthwhile to compare rates across various insurance providers.
What Amount of General Liability Insurance Do I Require?
For the majority of small-sized companies, a one million dollar per incident and a $2 million aggregate limit for Commercial General Liability is appropriate. To help with this it is recommended to have the use of a commercial umbrella policy that could be beneficial to provide a business with strong security.
Conclusion- What is General Liability Insurance for Contractor?
Contracting work is not without risks including accidents that can cause injuries to others to mishaps that could harm the property of others. General Liability Insurance can provide the protection you require to protect yourself from third-party claims for property damage as well as personal injury and advertising-related injuries.
Accidents can occur at any moment and ensuring that your business has CGL insurance can be essential to your company’s future. So, this concludes the topic for General Liability Insurance for Contractors.