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Much has been said about how great it is to be contractor compared to being an everyday employee. All those assertions would be right. It is absolutely rewarding to work as a contractor if only for the fact that you are your own boss. Of course, the money also tends to be better when you’re a contractor. This is often the reason most people turn to a contracting career.
It’s also important to note that all the perks that come with being a contractor come with a lot of responsibilities. Among these is purchasing contractors insurance. With contractors insurance, contractors should be able to protect their business in the event something untoward that will put the future of their operations happens.
The importance of contractors insurance
We live in a world where just about anybody can sue anybody for anything. People in the contracting business are typically the envy of many mainly because of the perks. But they’re also in the unenviable position of becoming the primary target of a lawsuit. In case something goes wrong with whatever project they have on their plate contractors insurance will help you deal with these problems and more.
So what exactly does contractors insurance cover? Let’s talk about the coverage provided by contractor’s liability insurance. This is one of the most essential insurance policies a contractor must have.
Third-party injuries and deaths
Let’s say that you’re a roofing contractor, and you have a three-person crew working up top. Say one of your crew’s tools falls off the roof. If while falling hits and sends, say, a visiting neighbor on the ground to the hospital, you, as the contractor, are liable to pay for the medical expenses of the injured party.
Depending on the nature of the injury, such a liability could easily move into five-figure territory. This would put a significant dent on the finances of your small contracting company. That is, if you don’t have a contractor’s liability insurance policy.
However, if you’re protected by standard general liability insurance, then all medical expenses of the injured party will be covered up to the limit of your policy.
Should the worst happen and the third-party injury leads to death, your contractors insurance should also cover funeral expenses. Let’s say the family of the fatality decides to sue and win. Your contractor’s liability insurance policy will cover any compensation the court deems to award them right up to its limit.
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Third-party property damage
Let’s revisit that wayward tool from the roof once again. Let us assume it doesn’t hit a person, but the windshield of a car parked right in the driveway.
Again, the contractor will have to pay for the damage. He won’t have to as long as he or she has contractors insurance coverage. Whatever property damage claims and lawsuits arise out of an incident at a contractor’s worksite, a standard contractor’s liability insurance policy will cover those costs right up to its limit.
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Incidents involving completed projects
A contractor’s responsibilities do not end when the paint dries on a particular job, figuratively speaking. You may have fixed that roof a year ago, but if the area you worked on caves in today, the homeowner who hired you has every right to file a claim against you. It will be even worse if the cave-injures somebody. You can then expect claims for both personal injury and property damage.
A typical general liability insurance policy covers you in case your completed projects result in a third-party injury and property damage. However, keep in mind that the insurance will cover as long as the policy is still in place. Cancelation of your contractor’s liability insurance at some point after the project completion will make you pay for those claims from out of your pocket.
In case of a sue in court to a contractor for claims, they face the possibility of spending a fortune on the litigation alone.
To defend yourself and your company from lawsuits, you have to hire a lawyer to represent you. Aside from attorney’s professional fees, there are also court filing and professional fees. There are too costs associated with photocopies of documents and other evidence, and even travel expenses. If the court decides against you, you can expect to need to compensate the claimants. The amount of this could be big enough to sink your contracting business.
Depending on its limit, a typical contractor liability insurance policy will cover your legal costs and any court-ordered compensation payment you have to make.
Limitations on the liabilities of contractors are not to specific projects they are working or have worked on. Even a simple advertisement that only aims to help put the word out there about your contracting business can trigger a lawsuit that can put you in a world of hurt.
So how exactly does a seemingly innocent ad become a magnet for lawsuits?
In the course of advertising your contracting services on social media, you might have used a copyrighted image with permission. Or, if your last ad took potshots at your competition, they might intend to sue you because they lost business because of your advertising efforts, which they claim are full of lies.
In today’s digital world, we all need to be careful when advertising our products and services online. One small mistake on our part could translate to a costly lawsuit by the end of the day.
We could get protection though, in the form of general liability insurance. Whatever non-physical damage claimants say you have caused their business, you can rest assured that your contractor liability insurance policy will cover everything as long as they’re within its limit.
Don’t let the financial repercussions of claims and lawsuits force you to cease operations. With the kind of coverage that a general liability insurance policy provides, you will have a safety net that will ensure your business will stay afloat even when someone sues or files claims against you.