Insuring Your Contracting Business

Like any business, contractors have their own unique risks and should have contractor insurance to help them stay protected.. Get the protection you need with the right insurance policies. Discuss the following (and additional) options with your independent insurance agent to build an appropriate insurance package for your business. 


Your business likely own physical assets. Protect these physical assets from damage, fire, weather incidents and theft with commercial property coverage.

General Liability

If your employees damage a client’s property (intentionally or accidentally) or if a client becomes injured because of your actions in his/her home, your business can be held responsible. General liability insurance can provide coverage for your operations should something like this occur.

Worker’s Compensation

If workers are injured while on the job, they could incur costly medical bills and lost earnings if they must take time off to recover. Workers comp insurance covers employees when an injury or illness occurs.

Surety Bonds

Surety bonds are necessary for various types of construction jobs, especially in regards to government jobs. It helps ensure that your company will get the job done. If something should go wrong, bonds can protect against disruptions or financial loss.

Commercial Auto

Just like your personal car must be insured by law, so do your business’ vehicles. Commercial auto insurance options are similar to personal auto insurance, and can be discussed with your agent.

Inland Marine

Goods on the move and goods being warehoused need protection, just like materials and tools at a jobsite. Inland marine coverage protects items in various stages of transit. 

FAQ’s About Insuring Your Contracting Business

What types of insurance should a contracting business consider?

Contracting businesses should consider various types of insurance, including general liability insurance to protect against third-party claims, workers’ compensation to cover employee injuries, professional liability insurance for errors and omissions, commercial auto insurance for company vehicles, and builder’s risk insurance to protect construction projects.

Why is general liability insurance important for contractors?

General liability insurance is crucial for contractors as it provides protection against claims of property damage, bodily injury, and associated medical costs that can occur as a result of the contractor’s work. This is essential for safeguarding the business financially in case of accidents or damages.

How does workers’ compensation insurance benefit a contracting business?

Workers’ compensation insurance benefits a contracting business by covering medical expenses, rehabilitation costs, and lost wages for employees who are injured or become ill on the job. This insurance is mandatory in most states and helps protect the business from costly lawsuits and ensures compliance with state regulations.

What is professional liability insurance, and why might a contractor need it?

Professional liability insurance, also known as errors and omissions insurance, protects contractors against claims of negligence, mistakes, or failure to deliver services as promised. This type of insurance is important for contractors who provide design or consulting services and can protect against legal and financial repercussions of professional oversights.

Can a sole proprietorship contracting business benefit from commercial auto insurance?

Yes, even sole proprietorship contracting businesses can benefit from commercial auto insurance if they use vehicles for work purposes. This insurance covers damage to the vehicle and liability for bodily injury and property damage that may occur during business operations.

What is builder’s risk insurance, and when is it necessary?

Builder’s risk insurance covers property loss due to hazards like fire, theft, or weather damage during a construction project. It’s necessary for contractors undertaking new builds or significant renovations to protect their financial investment in the project materials and equipment.

Are there any additional insurance policies a contracting business should consider?

Depending on the nature and scope of the business, contractors may also consider equipment breakdown insurance, installation floater insurance, and business interruption insurance to cover a range of potential risks and ensure comprehensive protection.

How does a contractor determine the amount of insurance coverage needed?

A contractor can determine the amount of insurance coverage needed by assessing the specific risks associated with their trade, the value of their projects and equipment, and the legal requirements in their area. It’s also wise to consider the potential financial impact of claims and the contractor’s ability to pay deductibles. Consulting with an insurance agent who specializes in the construction industry can provide tailored advice for adequate coverage.

What factors can affect the cost of insuring a contracting business?

The cost of insuring a contracting business can be affected by factors such as the type of construction work performed, the business’s claims history, the number of employees, the value of equipment and projects, and the location of the business. Insurers will assess the level of risk associated with the business when determining premiums.

How can a contracting business reduce its insurance premiums?

A contracting business can reduce its insurance premiums by implementing safety programs to minimize the risk of workplace accidents, maintaining a clean claims history, increasing deductibles where appropriate, and bundling multiple policies with the same insurer. Regularly reviewing and updating insurance coverage can also ensure that the business is not over-insured and that premiums are kept in check.

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