Contractors Insurance: Building Your Policy From The Ground Up

As a contractor you made a major financial investment even before you took on your very first client. You have tools, equipment, an office to run your operations, and vehicles to transport everything to and from your job sites. What would happen if you no longer had these tools or equipment because they were stolen or if your truck was totaled in an accident? Could you quickly replace it all? Would you risk defaulting on contracts, miss out on new opportunities, or have to shut down forever?

Like all business owners, you also deal with the risk of being sued. Strangers can slip, fall, and sustain injuries due to circumstances surrounding your operations. Equipment mishaps can damage property. Construction vehicles can cause accidents on the road. If you or your crew are held legally liable for any damages or injuries then you may owe the costs of medical bills, lost wages, property repairs, pain and suffering and/or other damages.

Because of life’s uncertainties it’s important to protect your contracting business and all that you have put into it. Here is what every contractor should know about contractors insurance:

Inland Marine Coverage

As a contractor your tools and equipment are your bread and butter so you need an insurance policy that covers them while kept at your business. But it doesn't stop there! Since the contracting business isn't stationary you also need protection while in transit and on the job. You need an Inland Marine policy, also known as a “floater,” which provides several options for mobile coverage.

• Tools and Smaller Items - You can insure small tools on a schedule which lists a stated value per item. You may also insure them on a blanket basis with a lump sum value.

• Larger Tools and Equipment - You can insure larger tools or equipment on a blanket basis or an individual policy with a stated value per item.

• Heavy Equipment - You may individually insure backhoes, cranes, and other pieces of heavy equipment on an “equipment floater” with a stated value per item.

A major benefit of insuring your tools and equipment this way is that it forces you to think and total what you own before a loss so you are more likely to have adequate coverage in case of a claim. You may not think you own that much until you add it all up. 

General Liability Insurance

Whether you are a large general contractor working with a lot of subcontractors on a project in Manchester or a sole proprietor handyman in Bedford your business encounters liability exposures each day. Your tools, heavy equipment, and ongoing operations are capable of causing injuries to bystanders. Minor errors in judgment can lead to major property damage. Even if your business isn't legally liable for the alleged damages or injuries, you'll have to investigate each incident and possibly defend it. If you are responsible then the costs of injury-related expenses and property repairs can add up quickly.

A liability insurance carrier can help relieve you of the responsibility of sorting through liability and damage issues. The contractor insurance company will investigate any claims, determine fault, and pay damages on your behalf if required. A contractor insurance policy will also pick up the legal defense fees if a lawsuit is filed against your business resulting from a covered claim.

Commercial Package Policy

Because not every contracting business is the same, a package policy offers a convenient way to fill many of your insurance needs while not paying for what you do not need. With your insurance professional you can determine what some of your risks are including:

Loss of tools and equipment,

• Loss to a commercial building,

• Loss of income, and

• Risk of lawsuit for property damage or injury

Business Auto Policy

As a contractor, you go where your customers need you so you must transport your crew and equipment to where needed. A Business Auto Policy provides coverage for accidental damage to your vehicles due to unexpected accidents on the road.

It includes liability coverage that covers the property damage and injury to another party up to the limits you request, as well as coverage for your vehicle if you choose collision and comprehensive coverage. It is important to speak with an insurance professional because a commercial auto policy can be very narrow, covering just the insured truck, or very broad, covering any vehicle used in your business. It is important to understand how your policy will respond if you need to rent or borrow a larger truck, or perhaps have an employee run a business errand with their own car. 

If you believe you don’t need a commercial auto policy as your truck is insured on your personal auto policy, check out a previous HPM Insurance blog: NH Car Insurance vs. NH Business Auto Insurance: What’s the Difference? It will give you some reasons why a commercial auto policy may be a better fit for your needs as a business owner.

The right insurance coverage is important!

You know you work hard and are good at what you do. Let an insurance professional do what they do, and help you protect your tools, equipment and livelihood, There is too much on the line to risk doing it yourself.

Ask your local friendly insurance agent to help you get started today!

This material is for informational purposes only.  All statements herein are subject to the provision, exclusions and conditions of the applicable policy.  For an actual description of all coverages, terms and conditions, refer to the insurance policy. 

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