Do You Need Contractor's Insurance?
Insurance companies offer policies that will combine protection from all major property and liability risks in one package. The package policies, or business owners policy are created for businesses that will generally face the same kind and degree of risk. Insurance agencies will offer larger commercial package policies, or customize their policies to meet any special individual risks their clients may face. Contractors who need insurance will benefit from this type of package. A contractor’s insurance may include business interruption insurance, which will cover the loss of income resulting from fire, major wind or other catastrophe that has disrupted their business operations. The insurance package that they customize should include property insurance for condos, apartments, homes, or business owned property and contents owned by that company. There are usually two different types of coverage offered in this area; standard and special, which will provide a more comprehensive coverage. Contractor’s insurance should also include liability protection, which would cover the company’s legal responsibility for the harm it may cause to others. Coverage for earthquake damage is usually excluded in most property insurance policies, including homeowners and business owners package policies. If you live in an earthquake prone area you will need a separate insurance policy or commercial property earthquake endorsement. Contractor’s insurance for earthquakes have a different kind of deductible. Usually it is a percentage of the insured dollar amount instead of a straight dollar amount. Business interruption insurance, which will reimburse you for the loss of income during a shutdown, applies only to the causes of damage you are covered under. If your business or construction site is shut down due to earthquake damage, you will need to have earthquake coverage to make a claim. After many major earthquakes, like the Northridge, CA one, the claims submitted against the original contractors for faulty construction was substantial. Contractor’s insurance policies came under quick review. Contractor’s insurance should also include a separate policy for floods if you live in a flood prone area like Sarasota or Bradenton Beach, FL. Every year flooding causes hundreds of millions of dollars worth of damage to homes, farms, and businesses. Commercial property insurance policies do not cover flood losses. To help meet the need for this coverage, the Federal Emergency Management Agency founded the National Flood Insurance Program (NFIP). Professional services, worker’s compensation, auto insurance, and health insurance are usually separate policies that will need to be purchased. Contractors need to research the area they are working in to find out exactly what kind of insurance policies would be best for them and their business. |