The 2 Main Benefits Of Contractors Insurance

Do you enjoy paying auto insurance every month? I don’t, but I do because it’s required by law. Sure, I can drive without insurance and risk losing everything because of it, or I can pay my monthly policy and rest assured that in the event of an accident, I am covered. That’s the point of having insurance, it’s to pass risk from you personally, to the insurance provider.

Contractors insurance isn’t any different, here are the 2 main benefits of having a general liability policy:

  1. Being insured is a great way to get more business

  2. Contractors get more business because they will actually qualify to bid on most jobs. Most homeowners and other contractors that sub work also like to have the peace of mind to know that the contractor performing the work is covered in the event of property damage or bodily injury.

    An example would be the following:
    John is a B rated general contractor, and he was awarded a job that requires replacing everything on the second floor of a mall. John will first consult with a general liability attorney to find out what kind of insurance he will demand when subbing work to artisan contractors.
    John will more than likely sub most of the work out to artisan contractors. He will need a plumbing contractor, an electrical contractor, flooring, etc.
    Before John even gets bids from these artisan contractors he will first require that they provide proof of general liability. Once John obtains the policies, they are passed on to his attorney for viewing. If the contractors insurance satisfy the requirements needed, this will then qualify the artisan contractor to submit a bid for work.

  3. Protect yourself in the event you cause property damage or bodily injury while working

  4. Scenario 1: A roofing contractor goes to a residential home to work on a leaky roof. The contractor sets up his ladder, climbs on top of roof, ladder falls and hits the owner in the head. The ladder impacted hard and has knocked the homeowner out. The homeowner is rushed to the ER and his hospital bills come out to $20,000. If the roofing contractor doesn’t have a general liability policy, the roofing contractor will be liable to pay for the homeowner’s hospital bills.

    Scenario 2: Same situation, but the ladder hits the homeowners Mercedes. Damage caused to car is covered by insurance policy. No general liability, no coverage.

    Scenario 3: Plumber is fixing a toilet, but forgets to turn the water off. Ends up causing 20k in water damage. Would be covered, as long as he doesn’t have a water damage exclusion on his current policy.

There are countless scenarios, but the message is clear.

General liability is in place to transfer risk from the general contractor to the insurance company.

Insurance is not required for all contractors in California, but it is a good idea to keep a policy to protect you in the event that something does happen.

If you do not have a general liability policy, allow Mainline Insurance to provide you with a free quote. You can get a fast and free quote by filling out the form here.

Have a Merry Christmas,

Michael Jones