About Contractors' Liability Insurance
Virtually every business needs a type of liability insurance. Contractors, whether commercial construction, residential construction or independent contractors must all consider purchasing liability insurance. In some states, carrying such insurance is required by law in order to maintain a valid contractor's license.
What Does Liability Insurance Cover?
Liability insurance covers a contractor in the event of a lawsuit over compensatory damages. A contractor can be sued over damages suffered by an employee, a client or any individual harmed during the course of business. Such damages include theft, negligence, physical on-site injuries, damage to property and other incidents. A liability policy helps pay damage awards, fines, attorney fees and other expenses the contractor incurs as a result of an event. The exact events covered and amount of coverage vary depending on the industry, insurance company and options.
Who is Required to Carry Insurance?
State laws dictate the types of contractors required to carry liability insurance. Likewise, some clients, commercial real estate rentals and other organizations may require a contractor to carry liability insurance. For example, in some states, construction contractors are required to carry liability insurance in order to obtain a business license. Similarly, most property management firms require commercial tenants to carry a minimum liability policy to cover damages suffered while on the premises.
Where Does a Contractor Buy Liability Insurance?
Nearly any insurance agency can provide a general business liability policy. Some industries may require specialized underwriting for liability coverage, necessitating an insurance agent or company that works with industry-specific underwriters. Costs, types of policies and other insurance vary based on industry, geographic region, and state requirements. For some contractors, a general liability policy is not sufficient to meet state, client or property management requirements.