Why your general contractor needs to have insurance

Why your general contractor needs to have insurance

Contractors need to have insurance to protect both themselves and their clients from financial liability in case of accidents or property damage occurring during a project, essentially shielding the homeowner or business owner from having to cover costs related to injuries or property damage caused by the contractor or their employees; this also allows clients to feel confident in hiring the contractor knowing they are protected in case something goes wrong.

When you bring a general contractor on-board for a construction or home remodeling project, he or she assumes responsibility for the build and just about everything else that happens on the job site. And with that enormous responsibility comes an equally massive liability.

Whether it’s a commercial building or a residential renovation project, construction jobs can easily become the largest investment of your life. That said, you have to protect yourself from any issues that might arise after the work gets off ground. Part of effectively safeguarding your interests hinges on the credibility of the people you choose to hire.

Remember that a workplace accident can take place at any time and even the best construction crew can make mistakes. While a homeowners policy does cover property damages, it has its own set of limitations. Hiring insured contractors that carry both general liability and workers compensation insurance is the best way to protect yourself from these risks.

Sign of contractor credibility

A responsible general contractor takes care and invests in his reputation. Having both license and insurance shows that they care about the quality of their projects. Furthermore, it is a good indication that the contractor you hire is reliable and in it for the long haul.

Assurance on quality

License and insurance go hand in hand. This is because to obtain the former; you need to have the latter. Contractors with both are most likely to do a quality job the first time because builds that are not up to contract standards might cost them their license.

Savings on maintenance

Insured general contractors are more expensive upfront. However, investing in their professional services may result in long-term savings especially on maintenance.

>Uninsured contractors are more prone to substandard jobs which may be expensive to correct later. Moreover, you will be obliged to cover for the cost of the repair or damage since the contractor you hire lacks or doesn’t have the insurance for it.

Property protectiony

If you hire an unlicensed contractor on purpose and some kind of damage or accident occurs, your insurance company has the right to refuse the claim. As a result, you’ll have to pay for everything from your own pocket.

>Aside from guaranteed property protection, hiring a licensed and insured contractor may have a direct effect on the value of your property. If you have had work done by an uninsured contractor and it was not up to code, you’ll have to disclose the information to potential homebuyers. Working with a licensed vendor has its advantages especially when you decide to sell in the future.

What insurance must a general contractor carry?

In most states, general contractors are required to carry at least two critical insurance policies: contractor’s liability insurance and worker’s compensation insurance.

Liability insurance

It could be something as small as a crack on the floor tiles or as costly as flooding your house. No matter the scale or extent of the damage, you shouldn’t have to pay for something that isn’t your fault.

When you hire a contractor with valid liability insurance, you will be compensated for any damages on the property caused by the use of poor-quality materials or shoddy work. Liability insurance covers:

• Damage Claims –The insurance covers the cost of repair for damages caused by the contractor while doing work on your property.
• Injury Claims – The contractor’s liability insurance covers any court judgments and medical or funeral expenses should anyone get injured while on duty. This is different from workers’ compensation insurance.
• Job Completion Claims – In case the contractor fails to meet expected standards, the insurance will shoulder, in part or full, the cost of fixing the mistakes.

Worker’s compensation insurance

Let’s say one of the guys left a box of tools in the middle of the driveway. After a while, somebody trips on it and gets severely injured. Who’s going to pay the hospital bills?

The Worker’s compensation insurance policy protects the crew by providing wage compensation and medical assistance in case of on-site injuries. Employing a contractor with an active workers’ compensation insurance will save you from any financial liabilities in case someone gets hurt while working on your property.

Ultimately, hiring a general contractor who has all the necessary insurance coverage in place gives you peace of mind. You won’t have to worry too much because you know that even if something does go wrong with the project, you will be appropriately compensated and free from any liabilities.

Who Is a Contractor in Florida?

Contractors are individuals who agree to offer services to interested customers for compensation. Agreements may be oral or written, and the offered services often involve building new structures or improving, altering, subtracting from, or demolishing existing buildings and structures.

Florida contractors are regulated by the state's Department of Business and Professional Regulation (DBPR), and they must be appropriately licensed by this agency's Construction Industry Licensing Board before offering their services. Note that licenses for electrical work are issued separately by the DBPR's Electrical Contractors' Licensing Board. The DBPR issues two main types of licenses:

• Certified Licenses: contractors with these licenses can provide their services in any jurisdiction across the state.
• Registered Licenses: contractors with these licenses can only work in specified jurisdictions.

Licensed Florida contractors are further categorized into three main classes:

• General Contractors: general contractors oversee construction and home improvement projects and coordinate the activities of other professionals involved in these projects. While these contractors are usually responsible for the day-to-day running of the project, they may also perform actual construction and repair work (not including plumbing, roofing, electrical, HVAC, and sheet metal work). Sub-classifications of these contractors include the following:
  • Building Contractors: these contractors' authorized scope of services is limited to the construction of commercial buildings and single or multiple-dwelling residential buildings that are not more than three stories high, the construction of accessory-use structures in connection with these buildings, and non-structural remodeling, repair, or improvement of any size buildings.
  • Residential Contractors: these contractors' authorized scope of services is limited to constructing, remodeling, repairing, and improving one, two, or three-family residences that are not more than two stories high, as well as the accessory-use structures in connection with these buildings.
• Specialty Contractors: specialty contractors specialize in particular construction and home improvement trades or crafts and offer services in these niche areas. The DBPR offers specific trade licenses for plumbing, roofing, HVACR work, electrical work, sheet metal work, and swimming pool construction and repairs. Carpentry, flooring, and masonry may be performed by general contractors or contractors with a specialty license (which indicates a specific trade the contractor is authorized to perform).
• Subcontractors: subcontractors are specialty contractors hired by a general contractor to work on specific portions of a larger project. Subcontractors usually have no direct contact with the project owner and generally work under the supervision of the general contractor that hired them.

Choosing the Right Coverage

Determining the right amount of commercial liability insurance for your business depends on several factors, including the type of business you run, its size, location, and the level of risk it faces. For example, a construction company typically faces more risks than a web design agency, and therefore may require a higher level of coverage.

Angel Family Insurance can help you assess your business's unique risks and ensure you have adequate coverage to protect against potential liability claims.

In conclusion, commercial liability insurance is an essential part of any business's risk management strategy. By protecting your business from potential lawsuits and claims, it allows you to focus on what you do best running and growing your business.

Angel Family Insurance makes it easy for you to get a commercial insurance quote. Choose to get your commercial insurance quote online in the comfort of your own home and at your own pace.

There are different types of commercial insurance coverages you can get to help protect your company. When you get a commercial insurance quote, you can choose the specific coverages you need for your company.

Many companies start with a Business Owner’s Policy (BOP). A BOP gives your business a good foundation of protection. That’s because it combines three essential coverages: business property insurance, general Liability insurance and business income insurance.

At Angel Family Insurance we are committed to helping you find the right insurance coverage at the best price. We are an independent insurance broker with options for you.

Our experienced, local insurance agents, take the time to assess your individual needs and develop a policy that fits your budget.