What tools do you consider your must-haves? Depending on your niche, the tools you can’t work without could range from hand tools to heavy equipment. But whether you’re a general contractor or sub, there’s one tool that every construction pro should have at the ready: contractor general liability insurance.
Why Do Contractors Need GL Insurance?
When you’re an independent contractor (aka self-employed) or a small business owner, your financial assets are at risk. When you work in an industry as inherently dangerous as construction, that risk magnifies even further.
Imagine if you were responsible for an injury or property damage to someone else. A passerby trips over the power cord to your table saw. Your hammer falls from your grip while you’re working on a roof and hits someone below. You forget to turn a sump pump back on and a basement floods.
We live in a society where lawsuits are common. The average cost of a slip and fall accident is over $20,000. And if one small accident became a lawsuit, the potential court costs, attorney’s fees, judgements, and settlements could become astronomical.
One small accident could exhaust all of your cash reserves. It could even put you out of business. Or worse.
Many small business owners and self-employed, independent contractors are operating as sole proprietors. And that means you can be personally responsible for your business debts. In other words, your personal assets are at risk, too.
How Does General Liability Insurance Work for Contractors?
Contractor general liability offers coverage from the financial repercussions of a third-party claim for injury or property damage. Which means you’ll have a safety net in the event of a claim or lawsuit.
Third-party Injuries and Medical Expenses
If a neighbor wanders over during your remodel work and trips on a power cord, breaking his wrist and losing a tooth in the fall, that’s exactly the type of third-party injury your liability insurance is designed to cover.
A standard GL policy will cover medical expenses and any lawsuits that arise out of a third-party injury, up to the limit of your policy. In the absolute worst case scenario, your policy typically provides coverage for funeral expenses and court-awarded compensation in the event a third-party injury leads to death.
Products- Completed Operations
You may not realize it, but even work you’ve long since completed could still put you at risk for a lawsuit. Like the upper cabinet that you hung a year ago could fall, striking the homeowner standing below. If it turns out that the cabinet fell because you improperly fastened it last year, you could be liable for that homeowner’s injuries. You could be a hundred miles away and that injury could be 100% your fault.
General liability coverage typically covers you in the event your completed work results in a third-party injury. But beware, this coverage may only be in place for as long as your policy is. In other words, cancelling your GL policy today could leave you at risk for tomorrow’s completed operation claim.
Third-party Property Damage
So you accidentally flooded the neighbor’s home when you failed to re-start a basement sump pump. Or you accidentally reversed your work truck -- with trailer attached -- into the neighboring yard and fence.
General liability insurance is there to protect contractors from property damage claims and lawsuits in the event you’re responsible for damage to someone else’s property.
You may not realize it, but even trying to get more business can put your construction business at risk for lawsuits. Advertising injuries are acts committed by a business in the course of advertising its goods, products, and services. Not sure how that applies to you?
Remember that picture you found online and used for your Facebook business page and on your website? Well, it turned out to have a copyright. You didn’t have permission to use it.
That small ad you took out that took aim at the competition? If any part of it was untrue and it caused your competitor to lose out on business, he could be aiming back at you.
Even a 140-character Tweet could lead to an advertising injury, so be sure to represent your business carefully and cautiously online at all times.
Advertising your business can be tricky, particularly in today’s digital world. There’s a lot of opportunities for a small slip-up as you put together a website, write a blog, and navigate your way through Google Plus, Facebook, Twitter, and a myriad of local contractor directories and forums. If someone alleges that you caused non-physical damage through your advertising efforts, you’ll be glad to have the coverage contractor general liability provides.
You wouldn’t begin a job without having the right tools and equipment in working order. The same goes for your contractor insurance protection, as well. Contractor liability coverage can help shield you from the steep costs of a claim or lawsuit in the event a small accident or mishap turns into a major expense. And in the construction industry, that sort of risk is lurking in 100 different places on every job you take. Hammer? Check. Hardhat? Check. General liability insurance for contractors? Check.