Contractors Insurance

Contractor’s Insurance… The Sleeping Giant

Lots of people around the country are looking to hire contractors to do a wide variety of tasks for them from remodeling a kitchen, to building new homes, and more.

Because of this there are many people looking to go into the contracting business.

But what many of these new contractors are unaware of is the fact that they must have contractors insurance.

Contractor liability insurance is absolutely vital because there are so many things that can go wrong in the construction industry.

Contractors need to make sure they have liability insurance to protect themselves. The average contractor today carries about two million dollars worth of insurance at all times.

The Level of Contractor’s Insurance Will Vary

The amount and type of contractors insurance varies from contractor to contractor depending on the exact type of work being done, how much liability coverage will be carried, how much the contractor actually makes, and the amount of payroll expense being carried by the contractor.

Generally, they will make a down payment on the insurance and will then make regular monthly payments for about 9 to 10 months.

There are a few things contractors should look for when deciding on an insurance company to provide them with contractors insurance.

First off, all insurance companies receive some sort of rating (A++, A+, A, A-, B++, and so on). It is the responsibility of the contractor to learn the company’s rating and how long that rating has been held.

Another factor of importance when choosing contractors insurance is how accurate and timely the company is when asked to provide any required paperwork.

When you need to provide certificates for work with very specific, rigid deadlines, it’s imperative to work with a company that is able to provide any necessary paperwork very quickly.

For example, in most construction work, you are able to bid on the work without showing any certificates. But generally, you cannot actually begin the work until the certificates are in place- and these must be original certificates each and every time.

Finally, the contractor should also determine whether to go with an admitted contractor’s insurance company or a non-admitted contractor’s insurance company.

An admitted company is one which has set aside funds to protect their policy holders in case that insurance company goes out of business.

A non-admitted company does not set aside these funds company-wide, but may have some agents who have done so.

The bottom line is if you wish to get into the business of contracting, you must protect yourself and your clients by having contractors insurance.