As a general contractor, it can be tricky to figure out exactly how much your services are worth. Go too high and you may lose business. Go too low and you may cut into your bottom line. If you are having trouble finding a happy medium, try these quick pricing tips. Read more
Contractors Guide to Licensing
When you set up your general contracting business, you will want to make sure that not only do you have the right liability insurance, but that you are properly certified and licensed. While the qualifications for licensing vary based on the contractors state license board where you live, there are certain universals that you will want to follow. Here is an overview of general contractor licensing and how it works from state to state.
Know Your Business
General contracting isn’t something that a person should simply jump into. It’s important to do your time in the trenches, learning the ins and outs of the business. A high school diploma or General Education Degree (GED) are vital in any case. You should then seek apprenticeships and training in your field. When you’ve spent several years in the business and have a strong handle on how general contracting works, you may be ready to approach licensing.
The basic qualifications to seek a licensure for a contracting business requires that the applicant be an adult of at least 18 years of age, can read and write in English and be of good and upstanding moral character. Most states will conduct a background investigation which costs a few hundred dollars and requires the following:
- Social Security Card
- Photo ID
- Proof of Residence
- Several months’ bank statements
- Licensure application paperwork
Some states may require additional information based on whether your business is a sole proprietor, corporation or LLC. Do your homework and investigate your home state’s requirements before getting started.
Assessment and Testing
Again, each state and type of contracting business has its own requirements, but many will require that you take an assessment exam to be sure that you know the laws surrounding the industry in your area, construction and building codes, safety procedures, OSHA requirements and the like.
As with anything important, make sure you take the time to do your homework. Look carefully into the requirements of your contractors state license board and into the specifics of what you’ll need to know to pass the assessment. Then, study hard to be sure you’re up on all the latest knowledge and information.
License Application and Fees
When you have passed your background check and assessment exams, the time comes to get your business up and running! You will need to get proper and adequate contractors insurance to cover your activities and protect you from liability and damages. This includes both general liability insurance and workers compensation insurance. You will then need to fill out an application for your licensure and pay the licensing fees to your contractors state license board. When everything is paid up and the papers in order, you will then be issued a license that makes it legal for you to work as a general contractor in your state. Congratulations on being a licensed contractor!
When you hire a subcontractor to complete a job, typically you hire someone you know. Someone who has a reputation for getting the job done well and on time. Still, there may be moments over the course of your career as a general contractor where you have to hire subcontractors that you are not familiar with. In those instances, you will need to be especially careful because, without the proper coverage, you could be found liable for the actions of your subcontractors. Here’s what you need to know about an indemnity policy.
What is an Indemnity Policy?
Contractors indemnity insurance was designed back in the 1990’s to combat certain limitations in liability insurance that left contractors exposed to unnecessary risk. Granted this risk was a little out of the ordinary as contractors began to take on more design build projects. Subjectivity, frustrated consumers and poor work by subcontractors all contributed to the creation of contractors indemnity insurance.
An indemnity policy will protect you, the general contractor, from liability that stems from an action or omission taken by your subcontractor. Long story short, if your subcontractor doesn’t follow through on their contractual obligations, you will not be held financially accountable. These policies aren’t entirely infallible and still have certain limitations that you will want to be aware of. Policy limitations are typically a result of negligence or failure to provide time notice of a claim but, such restrictions are usually dependent on your provider.
Who Needs an Indemnity Policy?
If you work as a General Contractor you will likely need some sort of contractors indemnity insurance. Construction jobs are very rarely a one man effort. It takes a team to get your project completed but, there is that saying that a team is only as strong as its’ weakest link. And your weakest link could ultimately end up costing you much more than just a game. An indemnity policy will keep you from having to bear the financial burden of your subcontractors when they manage to get into trouble.
If you have any further questions about an indemnity policy or if you would like to schedule a consultation please feel free to give us a call at 1-800-649-9094. We look forward to hearing from you!
As a general contractor you probably oversee, and lead, quite a variety of contractors and specialists. You’ve also probably seen plenty of them leave, or move on to other pursuits which means you may have had to look elsewhere for talented contractors. And when you look elsewhere there’s always a chance that you could end up with a disreputable independent contractor (no matter how careful you are). To protect yourself from the mistakes of your contractors, you may want to consider acquiring contractors protective liability insurance. It could save you a lot of money if you find yourself in a pinch.
Contractors Protective Liability Insurance
Like we said before, contractors protective liability insurance will protect you from any actions (conducted by your contractors or specialists) that results in a liability claim. Without this coverage, that liability claim would fall on you since you are the project leader. And, since the claim lies outside the realm of your commercial general liability policy any fines or litigation associated with that claim will have to be paid by your business. You don’t want that and contractors protective liability insurance will ensure that you are not held responsible for someone else’s actions.
Typically, we see claims on this policy as a result of vicarious liability (which is basically when you are held responsible for the failed actions of one of your employees when they were contractually obligated to complete that action). Think about it like being held responsible for the actions of your children when they make a mistake (except much more expensive). But, contractors protective liability insurance will protect you from all of those costly fees and litigation though there are some limitations. For example, most insurers will require you to purchase additional coverages such as general liability or a business owners policy because this policy does not operate as a stand-alone coverage.
When you’re talking to people and you say you’re a contractor they probably envision that you are responsible for erecting skyscrapers. They also might picture you wearing a hardhat and a bright reflective vest while you sip on a hot cup of coffee and listen to ACDC. And while you might do some of things, we doubt you fall into that exact stereotype. See, contractors come in all shapes and sizes and they’re all extremely unique. But, as unique as they are there is one policy that all contractors need (thanks to Uncle Sam) regardless of how unique their occupation may be. Here’s why you need General Contractors Liability Insurance.
General Contractors Liability Insurance
As we said above, general contractors liability insurance is required by law (at least in most states). And, when it’s not, it’s typically a stipulation or requirement in your contract. And if you don’t have it you could find yourself paying a crippling amount of money in fines. But, beyond avoiding fines, what are the advantages to having a liability insurance policy and why do banks, clients and government officials want you to have this policy? Well, you might be surprised (but probably not).
General Contractors Liability Insurance (CGL) is designed to act as your safeguard against lawsuits, injury, accidents and property damage. Today, lawsuits are more prevalent than ever and people will search for any reason to get a discount on that new addition to their home. And let’s face it, your services (as a contractor) aren’t cheap which could result in more people trying to make those services cheaper. Luckily, if you have a liability insurance policy you will not have to worry about any unnecessary litigation. But, litigation isn’t all that it covers. Your CGL will also cover…