INSURANCE COVERAGE FOR CONTRACTORS
Basically, insurance acts as a safety net, protecting businesses from financial ruin in the event of unforeseen occurrences. This protection allows companies to focus on their main business activities without the constant worry of disasters.
Following are several types of construction insurance:
Commercial General Liability( CGL) covers bodily injury and property damage claims.
Workers’ Compensation addresses medical expenses and lost wages for injured employees.
Professional Liability( Errors & Omissions) covers claims related to professional negligence or mistakes.
Builders Risk covers damage to the building under construction.
Business Interruption protects against lost income and expenses during delays or disruptions.
Surety Bonds guarantees performance and payment obligations.
But what are some of the risks of not having construction insurance?
The greatest risk contractors face without a reliable insurance policy is the loss of contracts through would otherwise have a good chance at securing. The reason for this is that primes— especially those receiving multiple bids— check the insurance coverages of each bidder. Having the most complete insurance coverage is a great way to distinguish yourself from the rest of the competition. 1
Technically, the only insurance that contractors are required to carry by law are workers’ compensation and commercial auto insurance. If a contract is secured without adequate insurance coverage for property damage, injury coverage, and other coverages, then you are at a higher financial risk if any incidents were to occur while on the job site. Costs can amount to tens of thousands of dollars that you may be responsible for covering out of pocket if your insurance is insufficient to cover your risks. 1
Depending on your location and who your clients are, you may be required to obtain additional coverage. The most notable types of contractors that require construction insurance are: General contractors, flooring installers, masons, roofing professionals, plumbers, electricians, and carpenters. 1
“ The number one thing that contractors have to understand is that no one will hire you without adequate insurance,” said Ken King, Account Associate with Merriwether & Williams Insurance Services, a HUB
SUMMER 2025 CONTRACTOR TOOLS- 29