All independent contractors should have general liability insurance to reduce legal issues in the event of a serious personal injury or property damage to others while you’re working. Below, we’ll outline why general liability insurance is so essential and offer some tips for working with insurance agencies and purchasing this type of coverage.
Why Do Contractors Need General Liability Coverage?
General liability insurance provides coverage for lawsuits filed against you by third parties for their bodily injuries or property damage.
Let’s say, for example, that you’re an independent general contractor, and you’re building an addition to a family’s home. One day, while on the job, one of the homeowners’ children is injured while playing on some of your building materials. Ostensibly, the family might sue you for the medical expenses needed by their child. In this case, general liability coverage would cover your legal expenses and any necessary damage payouts, if the lawsuit is valid.
Alternatively, let’s take the same scenario but say that the homeowners’ furniture was somehow damaged during your remodel project. The family might decide to sue for these property damages as well. Similarly, in this case, your general liability coverage would protect you by paying your legal fees, if necessary, and any damages you had to pay.
Tips for Purchasing General Liability Insurance as a Contractor
1. Know your risk level.
Contractors certainly have risk factors for the line of work they do, but it may vary depending on your particular skill set and what services you offer. Know what particular risks are most prominent for your business, and work with your insurance agent to find the best coverage for your risk level.
2. Revisit your coverage every year.
Risks can change as can things like the size of your business, what services you offer, and how many employees you have. All of these factors will influence your coverage needs, so be sure to revisit your policy each year and update it as necessary.
3. Make sure your clients know you have it.
You’ll want to make sure you receive a certificate of liability insurance, or a COI, from your issuing insurance company. You can carry this with you and show it to potential or current clients when necessary. It proves that you have insurance and that it’s current, and it shows what’s included in your coverage.
General liability insurance is one of the most common types of insurance needed by independent contractors. It’s also one of the most useful.