Commercial Contractors Insurance
Know What Kind of Contractors Insurance You Need
Commercial contractors insurance consists of more than one blanket policy, but rather, includes several separate policies with coverage that can be adjusted to suit the contractor’s current needs.
Policies within the commercial handyman’s insurance portfolio usually include a general liability insurance policy, which covers the contractor’s office, property, employees, hired and non-owned vehicles and legal fees, and offers protection against bodily injury, property damage, and negligence claims. Worker’s compensation insurance is compulsory for nearly every employer with payroll employees, much like disability coverage for employees. Commercial auto insurance is necessary if the corporation or association claims title to one or more vehicles, and inland marine insurance policies protect materials and products while warehoused or in transit.
General liability coverage is usually offered in $1 million, $2 million, and $3 million limits. Depending on the specific focus of the contractor, this liability may be expanded via an umbrella policy or excess general liability rider, or through one or more separate liability policies. Coverage can be extended to include warehoused materials and materials in transit via an inland marine policy.
Contractors working in certain fields may choose to invest in domestic or international builder’s risk insurance policies. These policies provide coverage for materials, machinery, and equipment on the construction site and in transit. Some policies might include coverage for sinkhole collapses, mechanical or electrical breakdowns, scaffolding and construction forms, and other variables not typically addressed by general liability policies.
Other specific insurances for commercial contractors might include environmental insurance, railroad-specific insurance, and builder’s risk construction insurance. There are even political risk insurance policies for those involved in large-scale projects, those with projects underway in developing nations, or those who import large amounts of materials from overseas locations.
When you’re ready to purchase a policy, your insurance underwriter will perform a risk analysis to determine the exact level of commercial contractor’s insurance your company requires. This risk analysis may also assist you in pinpointing potential “trouble spots” and help increase employee and management awareness.
Protect Your Employees with Commercial Contractors Insurance
All states except Texas now require business owners to provide workers compensation insurance for any and all employees who are on the payroll. Disability coverage at some level is also mandatory. Many states, such as New York, require proof of worker’s compensation insurance coverage as part of the building permits application process or as part of the contractor’s state licensure process, and a certificate of insurance separate from the one that declares general liability coverage may be required as well.
In a typical commercial general liability insurance policy, liability coverage is allotted to employees while they are working. This coverage will extend in many cases to include employees using their own vehicles to conduct company business (hired and non-owned vehicles). Contractors with employees working in especially dangerous locations or conditions might consider supplemental policies such as special casualty insurance. Contractors with employees who work on railroad-related projects might acquire “railroad protective” or other railroad-specific insurance.
A commercial contractor might in certain circumstances consider requiring employees to hold their own general liability insurance policies. This not only reduces the liability of the employer in case of an accident or property damage, but can also lower the insurance premiums of the contractor. Subcontractors and private contractors should maintain their own general liability insurance policies at all times, as they are not eligible for coverage under the general contractor’s commercial liability policy.
Many large-scale contracts will require employees to be bonded before they can work at a job site. Employee bonds might include fidelity bonds, also known as employee dishonesty bonds, which ensure that employees will not steal funds or documentation from their employer, rendering the employer unable to fulfill the terms of the contract.
Commercial contractor’s insurance needs will differ from industry to industry and from company to company. Whether your commercial contracting business has ten employees or a thousand, the professionals at ContractorsInsurance.org can help you find the policy that offers you and your employees the best coverage at the best price.
Although commercial contractor’s insurance addresses most aspects of business liability, many clients require contract-specific guarantees which are best addressed not by insurance policies, but by bonds. Surety bonds include most types of bonds commonly used in the construction industry, including bid bonds, payment and performance bonds, contract bonds, subcontractor bonds, maintenance bonds, and employee bonds.
Bid bonds are required by some clients as assurance that a bid, once made, will be honored. Payment and performance bonds ensure that a contractor will fulfill the terms of a contract in accordance with the guidelines of that contract. Contract bonds, also known as labor and material payment bonds, ensure that employees and/or subcontractors will be paid for materials and labor costs regardless of the financial or contractual situation of the contractor. Subcontractor bonds resemble payment and performance bonds, guaranteeing that the subcontractor performs in accordance with contractual agreements. Maintenance bonds act almost like warranties on the completed project or property, and render the contractor responsible for any maintenance or structural issues after the property is complete. Employee bonds regulate the conduct of employees and prevent employee theft and dishonesty.
Many times, the same companies that issue commercial contractor’s insurance policies act as the surety for construction bonds of all varieties. Contractors will pay a bond premium (usually one to three percent of the total bond value, although bond premiums may be as high as five to twenty percent for high-risk ventures). Bonds are an excellent way to provide clients with the necessary financial and contractual guarantees without having to segregate cash in an escrow account. Most bonds require no collateral, and turnaround time for bond issuance is usually only a few days after the bond premium is received