Contractors Liability Insurance
Working in the construction industry carries some inherent risks for everyone involved, including the contractor, the employees of the contractor, and the building owners. Not only do you have the inherent risks associated with the real estate market, you’re facing the constant possibility that something will go wrong during the construction process – which is why builders of any size should carry adequate contractors liability insurance.
It might be that the soil beneath the structure is unfit for building, and the company responsible for making that call didn’t do their job. It might be that one of the laborers on the job – skilled or unskilled – didn’t take all the necessary safety precautions. You just never know what could happen, and when there’s an injury or a major construction setback one of the first things people will do in today’s litigious society is call up the lawyers and start suing each other. Forget about winning or losing the lawsuit – just the cost of fighting a lawsuit over a period of months or years is probably enough to bankrupt most builders.
Contractors protective liability insurance puts a shield between honest and proactive builders and lawsuits of all kinds – both legitimate and frivolous, but this isn’t the only reason to keep a current policy. In most cases a builder will be able to bid on any kind of project they want without a liability policy in place, but it would be against the law for them to actually begin the work before securing the right protection.
That doesn’t sound very appealing does it? You’re a relatively new contractor just getting started, so you’re bidding on as many projects as possible. Out of the blue you have the good fortune of winning the bid on a large custom home in your area. Not only will this job pay well, but it will also help you establish your name with the kinds of clients you’ve hoped to work with on an ongoing basis. Only one problem – you don’t have the right insurance in place, and you lose the project because your new client doesn’t want to wait around while you get it taken care of.
So how much does general liability insurance for contractors cost? It depends on how much you need. Providers usually sell coverage in million dollar increments, so you could get $1 Million, $2 Million, $3 Million worth of liability coverage, etc. The more coverage you have, the more legitimate you look to prospective clients.
How much your insurance will cost will also depend on the type of work you’re going to be doing (whether big commercial projects or smaller residential work), and it will depend on how much the total value of your projects in a given year will be (the more money you bring in, the more insurance you’ll need).
Please don’t make the mistake of thinking you can skip this important step in setting up your building business. Of course your passion is completing quality project, and you have no plans to ever make a mistake that would make your protective liability insurance for contractors necessary – but that’s just the point. You’re preparing yourself for the unforseen possibilities that come up in every builder’s career. Take the necessary precautions that will let you stay in business for the long term.
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