Liability insurance for contractors and subcontractors

If there is an industry with massive ups and downs, it’s the construction industry. With materials at an all-time high, delivery chain delays, and just an overall hostile customer client, controlling costs and mitigating risks is crucial to the survival of your construction business. 

While you can’t control the cost of job supplies or the time it takes to get what you need for your project, you can manage your insurance costs and the cost of a job site accident.

How? Simple, be a better contractor. 

Here are five things you can do right now (if you haven’t already) to run a better contracting business.

Peace of mind for your client

Peace of mind is a fundamental benefit that insurance provides to clients. Insurance offers a sense of security and protection against potential risks and uncertainties in life. Whether it’s safeguarding their health, property, business, or loved ones, insurance ensures that clients can navigate life’s challenges with confidence. Knowing that they have coverage in place, clients can have peace of mind knowing that they are financially protected in the face of unexpected events, accidents, or losses. Insurance alleviates worries and anxieties, allowing clients to focus on their personal and professional pursuits without the constant fear of financial hardship. It provides a safety net and a sense of stability, offering reassurance that they can recover, rebuild, and protect what matters most to them. With insurance, clients can enjoy the peace of mind that comes from knowing they have taken proactive steps to mitigate risks and secure their future.

Peace of mind for yourself

Insurance offers individuals peace of mind by providing a personal safety net and financial protection. By having insurance coverage, individuals can face life’s uncertainties with a sense of security and confidence. Whether it’s health insurance, life insurance, or property insurance, knowing that they are protected against potential risks and losses brings a profound sense of peace. Insurance provides a buffer against unexpected medical expenses, unforeseen accidents, or damage to property. It allows individuals to focus on their daily lives, careers, and relationships, knowing that they have taken proactive steps to safeguard their well-being and financial stability. With insurance, individuals can navigate life’s ups and downs without constant worry about the financial impact of unforeseen events. It offers the peace of mind of being prepared and protected, allowing individuals to live their lives with greater ease and tranquility.

Insurance can provide potential lawsuit protection even in cases where claims may seem frivolous. Frivolous lawsuits are those without a legitimate legal basis or merit, often brought forth to harass or exploit individuals or businesses. In such situations, insurance coverage becomes invaluable. Liability insurance, such as general liability or professional liability insurance, can help individuals and businesses defend against baseless claims and bear the costs of legal representation. By having insurance coverage, individuals are protected from the financial burden of mounting a legal defense, which can be expensive and time-consuming. Insurance not only covers legal fees but also offers the expertise and support of insurance providers who have experience dealing with such claims. This ensures that policyholders have the resources and guidance to navigate frivolous lawsuits, protecting their reputation, financial stability, and providing peace of mind, even in the face of unwarranted legal challenges.

Bodily Injury and Property Damage (BI/PD) coverage is a vital component of liability insurance that provides financial protection in case you cause an accident resulting in injury to another person or damage to their property. BI/PD coverage helps cover medical expenses, rehabilitation costs, and legal fees associated with bodily injuries sustained by others due to your negligence. It also assists in paying for repairs or replacement of damaged property, such as vehicles, buildings, or other assets. BI/PD coverage is crucial because accidents can lead to substantial financial liabilities, including medical bills, legal settlements, and property repair costs. Having adequate BI/PD coverage ensures that you are protected from potential financial ruin resulting from a lawsuit or claims filed against you for bodily injury or property damage caused by your actions or negligence. It offers peace of mind, knowing that you have financial support in the event of an unfortunate incident that results in harm to others or their property.

How to explain property damage, bodily injury and “your work” in a simple example.

General liability does NOT reimburse you, or anyone else, for your work.  Insurance cannot, will not, guaranteee or indemnify the quality of your work.

So what the hell does it do?

Bob’s Chimney’s Unlimited, Inc has been contracted to build a new chimney on a building roof.  

Most people think of business insurance as “slip and fall” coverage, which makes sense.  While you’re in the store, and slip on something slick, you fall, get hurt, and sue everybody.

So for our Chimney example, we will assume Bob builds the chimney with no incidents.

Then, a few months later…. The chimney Bob built collapses, and bricks tumble down the roof, damaging the roof tiles and then striking a pedestrian on the street below, injuring their shoulder.

Bob’s Chimney’s Unlimited, Inc, is responsible for the damage caused to the roof, and the injury to the pedestrian below.  Lawsuits fly, and both the building owner and pedestrian gets checks, for “property damage” and “bodily injury” respectively.

Bob is LIABLE for the damage and injuries.  His “work” was faulty, or was it?  You could get into the weeds here, and start finger pointing, that happens. But ultimately, it’s Bob’s GL policy that’ll write the checks to the building owner and injured pedestrian.

However, NO MONIES are paid to repair Bob’s Chimney.  That’s on Bob.  Sure, some of the lawsuit money the building owner wins goes to a NEW chimney builder.  But that’s a decision the building owner makes with the settlement.  

[Of course, this ding could hurt Bob’s chances of getting another policy…]

When it comes to insurance, it is important to cover only what you do and avoid including things you “might” do. Insurance policies are designed to provide coverage for specific risks and activities that you engage in regularly or have a reasonable expectation of engaging in. Including potential activities that you might do can lead to unnecessary costs and complexities in your insurance coverage. It’s crucial to accurately assess your risks and determine the scope of coverage needed based on your actual operations or lifestyle. By focusing on insuring the activities you actively participate in, you can ensure that your policy aligns with your specific needs and provides adequate protection. This approach allows you to have comprehensive coverage for the activities you are involved in without paying for coverage that is unlikely to be used or necessary. It’s essential to review and update your insurance coverage regularly to reflect any changes in your activities and minimize potential gaps or overlaps in coverage.

Make sure it reflects your operations, never suggest operations that you don’t do, Why?: insurance underwriters will review your website to look for differences between the supplemental app you filled out, vs what your website says you do.  BE CONSISTENT

Let’s discuss how you can set your business up for success from the beginning.

Running a construction business can be challenging, and insurance can be even more complicated. That is where we come in. Our job is to get both sides, the insurer, and the contractor, talking to each other honestly.

This allows us to take on an advisory role, a partner, team, and resource. As an insurance broker, our goal is to help the contractor be a BETTER contractor.

When we connect these two worlds to make the contracting business stronger, safer, and more lucrative, the builders’ end-users won’t be suing the contractors! It’s a win-win. Insurance companies sell more insurance and pay less in claims, while contractors have better peace of mind and focus on their jobs.