Contractors general liability insurance protects contracting businesses from third-party claims of bodily injury & property damage. Contractors, contractors, and subcontractors often are contractually required to have business liability insurance.
Contractors General Liability Insurance
The process of construction is arduous and it involves arranging for raw materials; hiring specialized trades persons who undertake activities like plumbing, bulldozing, masonry and carpentry and managing the overall work flow. The firm or the party that supervises or undertakes the construction or the development of a property is known as the general contractor.
The firm may allocate the work to subcontractors who perform specialized tasks in accordance with the terms outlined in the primary contract that is worked out between the property owner and the general contractor. With so many potential risks, contractors general liability insurance helps to protect contractors with lawsuit coverage for accidents, property damage, injuries, and some work mistakes.
Although contractors can bid for work despite not having contractors general liability insurance, it is not advisable to work without it. In many cases, the contractor may not be permitted to start the construction work without adequate proof of insurance (Certificate of Insurance - Acord 25). This is because contractors general liability insurance covers third-party claims that a contractor is likely to face during the course of operations.
Contracting business types needing liability protection include:
- Cabinet, Millwork and Finish Carpentry
- Ceramic and Mosaic Tile
- Construction Zone Traffic Control
- Earthwork and Pavings
- Fire Protection
- Flooring and Floor Coverings
- Framing and Rough Carpentry
- General Manufactured Housing
- Insulation and Acoustical
- Lathing and Plastering
- Limited Specialty
- Lock and Security Equipment
- Low Voltage Systems
- Ornamental Metal
- Painting and Decorating
- Parking and Highway Improvement
- Reinforcing Steel
- Sanitation System
- Sheet Metal
- Snow Plow
- Structural Steel
- Swimming Pool
- Warm-Air Heating, Ventilating and Air-Conditioning
- Water Conditioning
- Well Drilling
What Does Contractors General Liability Insurance Cover?
It helps to protect the contractor from accidents, liability, and law suits that may result from contracted work. Insurance can help contractors by paying for legal defense, including fees, court costs, awards and judgements. That's is why all contractors should have contractors general liability insurance that provides protection against claims with regard to property damage, personal injury or negligence.
Contractors insurance covers bodily injury and property damage that is likely to occur during the course of work. There are exclusions that exclude coverage for damages that may arise on account of faulty workmanship, provided the damage occurs prior to the completion of the construction project. Contractors general liability insurance also provides coverage for claims arising on account of property damage and bodily injury after the completion of the project.
The Owners and Contractors Protective (OCP), which provides coverage relating to subcontractors and independent contractor, is not included as a part of the general liability policy. Typically, a general contractor is not responsible for the subcontractor's mistakes. However, attorneys for subcontractors have found loopholes that allow them to sue the general contractor for negligence.
So before hiring subcontractors, the general contractor needs to ensure that the former has their liability insurance. General contractors should always require subcontractors to have their own general liability coverage, and named them as an additional insured on their policy. This will assure the general contractor is notified if the sub cancels their policy.
Contractors general liability insurance also provides coverage for claims on account of personal and advertising injury, which insures the following offenses in connection with the insured's advertising of its goods or services: libel, slander, invasion of privacy, copyright infringement, and misappropriation of advertising ideas.
How Much Does Contractors General Liability Insurance Cost?
How much does contractors general liability insurance cost? It varies depending upon the level of risk, the nature of work, the payroll expenses, the gross receipts of the company and the amount of coverage required. The contractor is required to make a down payment for a general contractor liability insurance, and follow it up with 9 or 10 consecutive monthly payments.
Insurance companies have ratings that help customers assess the financial strength of the companies. This is important since a number of companies have ceased to operate due to inadequate financial strength, competitive forces, or changing market place dynamics.
Contractors General Liability Insurance - The Bottom Line
We hope this article on contractors general liability insurance has been informative. This coverage that protects you and your contracting business from unexpected financial losses.