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Different Types of Contractors Insurance for Different Jobs

Published: 09/04/2010 by Patsy Hamilton

Depending on where you work, contractors insurance may be required to do business. Some types of insurance are always required. Here’s a look at all the different kinds.

Workers Compensation is an example of a plan that all employers in the US and Canada must have. If you have laborers that work for you, they must be covered.

You should also encourage your worker’s to acquire disability coverage. This plan is in addition to anything they would get through workers comp in case they became disabled on the job. Plans are available that cover short-term disabilities like a broken leg. This can be very important to a worker that lives from paycheck to paycheck.

Most homeowners and real estate investors will ask to see proof of workman’s comp before they sign a contract. This is because they would be liable in the event of an accident if one of your employees was not covered. Your employee could sue them. Most of your clients will be smart enough to ask. So be prepared.

Other types of contractor insurance might not be required, but they could be a good idea. General Liability is one that most contractors and other types of businesses have. This protects you in case you are sued.

A client could sue you for damage to their property or for using faulty products. A recent example was the Chinese drywall incident that occurred in the US and affected some parts of Canada.

Homeowners first sued the builder and then the drywall manufacturer. The courts ruled in their favor against the manufacturer. Some of the cases against the builders are still in court.

General Liability plans have a maximum pay out. You can purchase policies in different amounts. It’s a good idea to think about the project being completed when purchasing these policies. The bigger the project, the more liability coverage you should have.

Bonds are another type of contractors insurance. If you win a bid for a large project, you may be required to purchase bonds for performance, permits, surety, street obstructions and licensing.

Bonds can protect you in case one of your employees does substandard work, not in compliance with local building codes. A suit could cause you to lose all of your assets if you are not bonded.

Although you might not think of it as contractor insurance, you should be sure that all of your commercial vehicles are insured. Workers that drive their own vehicles on to the job site should be required to show proof that they have at least a liability plan in force.

As a contractor, you might be worried about how much all of this could cost. What you should think about is how much it could cost if you are not covered. Builders have lost their equipment, their businesses and their personal assets, because they failed to have adequate protection.

Better safe than sorry is the rule here. You always hope that you will never have to use your contractors insurance. But, you’ll sleep better at night knowing that you have it.

Patsy Hamilton is a home improvement journalist at HomeImprovement411.ca. For more great useful home improvement articles or to find work if you are a contractor, please visit: http://www.homeimprovement411.ca

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