The private sector construction spending in the US in 2021 was $1.25 trillion. The public sector construction spending was $346 billion as reported by tst europe. Commercial construction cost $97 billion in 2022. Single-family residential construction, on the other hand, cost $404 billion.
The information above highlights the importance of the construction industry. Contractors and business owners should know the relevance of general liability insurance to their business.
Harm, injuries, or damages to third parties may occur while a contractor is discharging his duties. Lawsuits from such incidents may lead to bankruptcy.
General liability insurance exists to protect contractors from this harsh reality. It provides legal cover for such incidents as injuries and damages to third parties.
This article covers what contractors should know about general liability insurance. An important insurance policy they should not neglect.
How Do You Explain General Liability Insurance?
General liability insurance covers some common accidents and damages in a business place. This may include bodily injuries or accidental property damage.
A contractor must know what general liability insurance can do for him. Knowing this means protecting his business and staying afloat for a long time.
Not knowing this is the surest way to ruin your business.
Why Should a Contractor Get General Liability Insurance?
This insurance protects contractors from amounts they become liable to pay when things go south. It could be injuries or damages to third parties.
Contractors must know that clients require this type of insurance. The reason is to ensure their financial capacity to pay in the event of claims.
It helps shield businesses from costly legal claims and financial damages. These damages may result from unforeseen events.
This insurance is often required by law or contract. It brings peace of mind to contractors and their clients by ensuring that they are protected.
Also Read: How Business Interruption Insurance Works in Florida
What are the Requirements for General Liability Insurance for Contractors?
States in the US have various requirements for general liability insurance. Louisiana for instance, has the following requirements;
- Residential contractors should have a minimum of $100,000 in coverage.
- Mold contractors must have $50,000.
- Home improvement contractors must have $100,000.
General contractor insurance helps shield your business from costly legal claims and financial damages resulting from unforeseen events.
Who Needs General Liability Insurance for Contractors?
It is important to know who the general liability insurance for contractors serves. It is not for contractors alone. Here’s a list of those who need general liability insurance;
1. General Contractors
Individuals or businesses that work in the construction industry as general contractors need general liability insurance for contractors.
General contractors include builders, remodelers, and other professionals who oversee construction projects and hire subcontractors to perform various tasks. They all need general liability insurance.
2. Heavy Machine Operators
It is also important for those who work with heavy machinery, operate vehicles or handle hazardous materials.
These activities can pose significant risks to both workers and others within the work environment.
3. Government Agencies/Clients
Do you know that general liability insurance is also required by clients? This is to ensure that contractors are financially protected in the event of accidents or unforeseen incidents.
It is also required by government agencies and before contracts are signed.
Also Read: How to Get the Best Commercial Property Insurance Quote in Louisiana
What Makes General Liability Insurance for Contractors Important?
General liability insurance is important and serves several purposes. Generally, it helps contractors and their businesses thrive even in ugly situations.
Here are some reasons general liability insurance is important:
1. It Helps Contractors Get More Jobs
One of the things you should know about general liability insurance for contractors is that having it in place shows clients that your business is trustworthy.
Businesses advertise that they are insured because they understand its importance and how it makes them stand out.
It is important to know who the general liability insurance for contractors serves. It is not for contractors alone. Here’s a list of those who need general liability insurance.
2. It Helps Your Business Stay Compliant
In some states and cities, you will only get a business permit if you have general liability insurance and a certificate of insurance.
Keeping your business compliant is the proper thing to do if you plan to flourish in the city or state in which your business operates.
3. It Lets You Focus on Growing Your Business
Having general liability insurance gives you peace of mind. This helps your business grow.
You can rest assured that your business is protected against accidents and unforeseen damages.
What Areas Does General Liability Insurance For Contractors Cover?
General liability insurance for contractors covers the following areas:
- Business Property Insurance:
If you have a physical location or office and store equipment there, you should get this insurance.
General contracting goes beyond buildings; it includes organizing contracts, plans, client information, and maintaining records.
Protecting your data and equipment is as important as securing your tools, inventory, and vehicles.
- Builder’s Risk Insurance:
General liability insurance protects your materials or equipment in the event of damages or loss. This may occur when they are being used for the construction or renovation of a building.
- Workers Compensation:
General liability insurance helps you cover employees’ medical expenses and lost wages if they get injured at work. It can also protect your business from lawsuits when injuries occur.
- Commercial Auto Insurance:
This insurance policy can help repair damages to your vehicle and other properties. It also covers personal and third-party injuries.
- Contractors’ errors and omissions insurance:
This protects your business from accusations of errors, negligence, incomplete or faulty work.
With this insurance coverage, your insurance company can provide you with a lawyer. They can also cover legal fees.
- Inland Marine Insurance:
This is coverage for equipment you are transporting to and from a worksite. It also covers equipment stored at a job site.
Also Read: Different Types of Business Insurance Policies in Louisiana
How Much Does General Liability Insurance Cost?
The cost of general liability insurance depends on some factors including,
- The size and scope of the contractor’s business.
- The type of work carried out and
- The coverage options selected
On average, general liability insurance for contractors can range from $500 to $2,000 per year. It is higher for small businesses and significantly less for big businesses.
General liability insurance for contractors protects contractors from legal damages.
