Who Needs Contractors Insurance?

Contractors work in a sensitive line of duty where a small fault can lead to tremendous or permanent damage. Although contractors are professionals, they are humans who can make errors. Their tools, equipment, and machines can fail, and natural catastrophes can occur when they are on site. Due to these faults, contractors need a contractors liability insurance policy to protect them when such issues arise. Construction businesses are at high risk of being sued due to errors, accidents or events not in their control. Injury or damage lawsuits can attract large sums of money in the form of compensation. Furthermore, small or medium-sized businesses risk closing down. Their bigger counterparts can handle such claims, but an insurance policy can ensure their funds are channeled into other useful tasks. Insurance policies can save contractors from such difficult situations. Contractor insurance providers target carpenters, electricians, drywall contractors, general contractors, machinists, welders, fabricators, roofers, masonry & concrete professionals

1. General Liability Insurance (GLI)

This is a basic insurance policy that all professional in the construction industry should at least have. Many countries require all businesses to at least have this policy as it covers claims for injuries, property damages, and projects not satisfactorily completed.

The GL package consists of basic coverage which includes.

Medical Expenses – This is a cover that caters to medical expenses for a third party person. The contractor is not necessarily to be blamed for the accident, but the law requires the injured person to be compensated. The GL cover will save the contractor from servicing the claim which at times is not due to his/her faults.
Products-Completed Operations – A contractor may be sued for injuries to a third party resulted from their work. Errors occur, and construction can collapse and injure a person. The law requires the person to be compensated by the contractor on site and it will be a great loss if they have no insurance coverage.
Advertising and Personal Injury – A contractor can be sued from injuries inflicted on others due to their advert; compensations derived from copyright lawsuits will leave a non-insured company with a financial problem.

Bodily Injury Liability – GL insurance cover compensates a third party in case their client is sued for being the source of their injuries. A contractor may not be on site when the injuries happen, and the insurer will save the day. Apart from insurance settlements, The GL cover will pay for defense costs and judgments costs as awarded by the court.
Property Damage Liability – The GL cover pays for defense costs, judgments costs, and compensation claims when their client is sued of directly or indirectly damaging other person’s property.

2. Commercial Umbrella (CU)

Umbrella policies are necessary for when a contractor requires a higher protection limit than the one provided by the GL. The policy is affordable to most contractors and is more convenient as it accommodates any exposure subjected to them. A contractor who owns a small or medium company or one who operates as an individual is the one suited by this insurance policy. GU cover may not offer protection to an individual, their property and tools, equipment or machines. A CU policy will protect the contractor when accidents directly interfere with their operations.
The contractor should be keen to understand the policy terms to know to what extent they have covered as well as their property, tools, equipment, and machines.

Contractors Insurance policies are for all in the construction-related businesses. Contractors should at least get the insurance plans as required by the state they are in, and an additional policy plan is to their advantage. Honoring insurance premiums gives individuals or companies the peace of mind to concentrate on running their businesses as the insurer works to meet court demands.…

All About Contractor License Bonds

Contractor Bonding

Construction contractors require being either licensed or registered with their local authorities or state. This process often needs a contractor license bond. A contractor license bond can be described as a kind of surety bond, i.e., an agreement between 3 parties: surety (the bond provider), the obligee (this is the entity that needs bond such as a state) and the principal who is the contractor. A contractor license bond acts as a form of guarantee that the contractor will comply with every regulation that is imposed by the respective local authority. It is concerned with the general compliance with statutes of a license. In other words, it is a surety line of credit for business. It provides additional protection for your clients that you will diligently fulfill your work.

Conditions

Before a surety issues a contractor with a license bond, through scrutiny is conducted on your business and financials to ascertain that you can successfully fulfill your obligations.

This means that if a contractor fails to comply with the regulations resulting in damage to any party covered by the bond, then a claim can be legally filed. If the contractor’s actions are determined to e unlawful, the surety covers the immediate costs but up to the penal sum of the license bond. It should be noted that the contractor will be required to reimburse the money soon after by the indemnity agreement which, constitutes the bonding process.

Contractor bond cost

The cost of contractor license bond is normally in the range of 0.75%-2.5% of the entire amount. However, the percentage amount is a factor of business and personal status, i.e., business experience, financial statements and credit score. Construction contractors with excellent overall conditions pay less compared to those bad credit.

Also, each local authority and state has varying requirements about the bond amount.

How to decrease contractor bonding cost

There are some effective techniques for reducing the contractor bond cost; these include the following:

Credit score – The credit score ought to be high for one to pay low amounts.

Overall financial status – It is good and advisable to showcase good liquidity and strong financial statements.

Provider – Select a good surety bond provider.

Who requires it

A contractor license bond may be required from Home improvement contractors, Carpenters, Roofers, Electricians, Plumbers, HVAC contractors and General Contractors.

Claims

Contractors who have breached the agreement of the contractor bond can face a claim as earlier mentioned. This may be due to non-compliance with local regulations or state regulations, failure to declare taxes and pay them, use of fraudulent business methods, etc.

It should be noted that bond language, as well as forms, vary depending on location. If a claim is made, there are several actions that can be sought such as out-of-court settlement and it is the most highly recommended. Alternatively, the matter can be taken to court for settlement.

Unfortunately, if the court case is lost, then you will be forced to compensate the claimant financially up to the whole penal sum of the bond.

The above insightful information outlines in detail all about contractor license bonds, knowledge of such is important for those in the business as ignorance is no excuse.…

How Can Your General Liability Insurance Cover Your Hired Auto For Construction?

In California, most of the construction business owners are well aware of the concept of auto insurance, and thus they always look for a good GLI product that can give them auto insurance coverage too. With this, they can easily avoid the big expenses that can arise due to the accident in the workplace. Starting from the vehicle repair cost to medical expenses of the victim, you can pay off everything from the insurance coverage itself. But what if you have vehicles that you have hired form a different source and not belong to your company? If your non-owned or hired vehicle meets with an accident in the workplace, then who will pay the cost of the repair or the medical expenses of the victim? Certainly, your conventional auto insurance not covers these expenses. This is the reason for this kind of cases you have to take the help of the non-owned auto coverage from your general liability insurance company.

Include hired auto coverage in your GLI bonds

There is no guarantee that when your employees use their vehicle or hired vehicle for your business work, then they will not meet with an accident. If it happens, then you have to face big expenses to compensate for the damages to the vehicle or for the medical expenses of the victim which will eventually eat up a larger part of your business capital. This is the reason now every construction business company adds the auto coverage for hired and non-owned auto clause to their general insurance bonds.

If you add this clause to your GLI bond then in the event of an accident with your hired vehicle for construction job your general insurance can take the responsibility to pay off the charges. Though it is true that for that you have to shell out a more money but on the other hand with this step, you can easily save your company form big losses. By asking your general insurance provides you can add this auto coverage to your policy and work at peace.

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