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Insure your people. Insure your future.
Prevention should be your first line of defense against workplace accidents. But even the best plans by the most vigilant companies can’t reduce injuries to zero.
Especially when it comes to the construction business. When accidents happen, and they will, insurance is your second line of defense. Do you have coverage? Is it an adequate amount? Has your policy grown with you or lagged behind? Are you covered for any new developments in your business?
Answering these questions is imperative to your long-term success.
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Very much depending on the line of business and the nature of trade, a contractor should consider the following insurance.
| Commercial General Liability | Most contractors should have a general liability policy or CGL designed for their work field. |
| Professional Liability | Professionals such as CPAs and consultants should carry professional liability insurance, commonly known as errors and omissions coverage. |
| Health Insurance | If you are an employer that is hiring workers, it is mandatory to carry workers' compensation insurance or get additional private health insurance. |
The common Contractor Insurance is usually designed to protect the insured in two main categories.
- Liability - Any negligences resulting in other people's injury or suffered financial loss. In other words, the 3rd party coverage.
- Own Property - Such as damage in the insured tools, investment or any material. In short, the first-party policy holder's coverage.
To further clarify, a Contractors General Liability Insurance protects contractors financially from financial loss when they become obligated to :
- pay due to damages or medical payments because someone suffered from bodily injury, property damage or personal/advertising injury to third parties and when it is occurring during the policy period caused by or relating to the contractor's negligence. (You can read more on Commercial General Liability here).
The property insurance covers insured from financial loss due to loss of use, business interruption, tools or building.
If you run a business that produces income through a service contract and has no employees, you're considered self-employed. You can buy private health insurance, Commercial General, Professional Liability and property insurance through this website by clicking "get a quote below." You're not considered an employer only because you hire independent contractors to do some work.
Most contractors will be asked for a "proof of insurance certificate" as a normal business practice before being offered a contract. The contractor can ask their insurance broker for this certificate. It will have the name, policy number, insured address, nature of the business, beginning and expiry date, insurance company information and address. In most circumstances, the company requesting the certificate may also ask to include their name as additional insured on the policy.
The cost of an insurance premium for Commercial General Liability solely depends on the line of business. If you are welding in the military or oil and gas site, the premium will be high compared with a janitorial contractor working for a commercial office. Another factor that impacts the premium will be the annual revenue (as more business means more risk exposure), industry, number of employees, the crime rate in the area, claims ratio from industry peers doing similar jobs. We have started to see the credit score of the owner may impact the premium as well. Based on our experience, standard general liability insurance for low exposure contractor is surprisingly affordable. Most policies cost less than $1,000 per year. A $1 million policy costs $500 to $1,000 per year. While a $2 million worth of coverage will cost an average of $800. Again, these are for references only and subject to many variables, and it goes on a case by case basis. Please click below for a more accurate quote.
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Doing Work as an Independent Contractor: How to Protect Yourself and Price Your Services
- Protect your social security number
- Have a clearly defined scope of work and contract in place with clients. Any subcontractor you hire, ensure they are licensed if it is regulated industry, insured and best of all, bonded.
- Get general/professional liability insurance.
- Consider incorporating or creating a limited liability company.
- Commercial General liability insurance
- Commercial Property and equipment insurance.
- Boiler and Equipment insurance.
- Employee tools insurance.
- Crime
- Business interruption insurance.
It is illegal for an unlicensed person to perform contracting work on any project if the work is regulated by-law. If an unlicensed contractor tries to sue someone who hired him/her for unpaid work, no court will enforce payment! On the other hand, any damage caused by the unlicensed contractor to a third party may be liable to you or your insurance. Resulting in an increase in your contractor insurance premium or outright decline on your insurance renewal the following year.
How Do I Handle Damage Caused by a sub Contractor?
- Start With Your Insurance Company. Call your insurance broker and explain the problem.
- Call the contractor and explain that you've already talked to your insurance company.
- Keep Cleanup to a Minimum.
Always ensure your sub-contractors have their insurance and request "proof of insurance" with your company as additional insured on the insurance certificate before allowing them access to a site.
In a regulated professional such as HVAC, Plumbing, Electrician, if the contractor is licensed, it means that they have a legitimate claim to be a professional in their industry. Having a license also shows that the contractor is serious about each job they do, and they won't cut corners when it comes to their work on your construction project.
As a self-employed contractor, it is your responsibility to make sure your insurance covers are not only right for your business but they offer adequate cover. You can take many insurances, but, as mentioned above, two of the most important are Commercial General Liability and Professional Liability insurance.
Some other best practices to keep in mind as you finalize a written agreement:
- Make sure the subcontractor or yourself obtains a permit if the job requires one.
- Ask for a copy of the subcontractor's license and proof of insurance.
- Pay by check and get a receipt.
- Document any changes to the contract in writing.
- Keep a file for all related paperwork.
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A small business owner policy (BOP) could consist of a couple of coverages pack. The adhering to are the eight most common insurance policy coverage types that an entrepreneur must recognize.
- This coverage protects if bodily injury, property damages, injury or advertising injury incur with your business.
- Have this coverage part of small business owner insurance to defence when business earnings and extra expenditure is at risk.
- Secure against a business when found responsible for an issue with one of the items they offer.
- If a business gives professional guidance or provides a professional opinion, it should probably carry professional liability insurance.
- Secure against Construction If you are in renovation of builders.
- Defence against tools or equipment breakdown. (It can be a furnace or machine) when it requires time and money for a replacement.
- Secure against your property or stocks
- Bundling a small business owner package (BOP) to with business use vehicle including transport of cargo.
Employment Practices Liability
Electronic Data and Equipment
Valuable Papers and Records
Job site Short-Term Pollution from Pollutants
Identity Theft
Blanket Insurance on valuable property
Limited Property of Others Liability
Luckily, the answers are just a call or click away when you work with UW.
