Types of Insurance Your Contractors Should Have

When you and your company embark on a building project, you work to get the best quality you can afford: an architect with a reputation for excellence, materials that will stand the test of time, and, ideally, a contractor that is fully insured and can take point on any issues that arise on the jobsite. While some contractors promise good work on the cheap, the minute something goes awry, you will be left holding the bag. That’s why you need a contractor with the right insurance because it’s not just a sign of quality, it’s a down payment on your peace of mind.

General liability insurance. When something goes wrong on the jobsite or related to the job that lies within the scope of the contractor’s work, general liability insurance saves the day. From construction defects leading to harm to any other occurrence, even the bizarre, such as a wrench falling on a passerby’s head, this type of insurance will come into play in order to pay the bills created by the contractor’s actions or lack thereof. Should any adverse incident occur, this type of insurance will also cover any court judgments and medical or funeral expenses that emanate from an occurrence related to your project.

General liability insurance will also cover job completion. Thus, if a contractor fails to meet the deadline or does work that was not contemplated in the plan, the insurance policy will cover the cost of fixing the mistake. Given the number of incidents that can occur, you should insist that any contractor you hire carries a quality general liability insurance policy.

Workers’ compensation insurance. Jobsites are dangerous places, even when the most stringent precautions are taken. Employees can be trained in safety procedures, and signs can be placed reminding all workers of the dangers they encounter on a daily basis, but workplace-related accidents can and do occur despite prior preparation. Workers’ compensation insurance ensures that bills arising from a workplace-related accident are able to be paid by the insurance company instead of impacting your bottom line. Verifying a potential contractor’s workers’ compensation insurance coverage is an important step toward protecting the investment you’re making.

Both of these types of insurance go hand in hand with a valid contractor’s license, and a contractor wanting to work on your project without one or the other, or both, should be an immediate red flag. In some cases, your own insurance policy on a property may refuse to pay an otherwise valid claim if you do not hire a contractor who is licensed and carries insurance. Some may want to skirt the cost of hiring a more expensive contractor, but paying for cheap work in the short term often carries hefty long-term consequences.

If you’re considering engaging a contractor for a commercial building or construction project, the more information you have before you sign on the dotted line, the more informed you’ll be. Contact our office for professional input on the types of insurance your contractor should carry. We’re happy to help.