Contractors play a big role in the economy. They're responsible for building and fixing structures, along with a range of other tasks that keep life moving in an orderly manner. They're a common presence in our homes, offices and throughout public spaces that need regular maintenance and repairs.
Contractors enjoy many benefits, including the freedom to work when they want and on the types of projects that interest them. They also can choose their clients.
However, they don't have certain protections that traditionally hired part- or full-time employees receive via their employers. That includes insurance to cover them — and subcontractors they might hire — in case of damage or an injury on the jobsite. Defending a lawsuit for property damage, for example, can run into the tens of thousands of dollars or more, forcing a contractor into bankruptcy.
The need for contractors insurance
Contractors insurance can protect against the aforementioned types of losses. It ensures there is money to pay for legal bills related to defending a suit and can help with financial penalties.
Contractors range widely in company size and the type of work they do, which means they face different potential risks. A solo plumber may require different coverage than an engineering or construction contractor who oversees several individuals or hires subcontractors. An electrician’s needs may differ from a janitor’s.
Whether you’re thinking of becoming a contractor or already are one, it’s important to know what’s appropriate for your situation. That requires time and research — as it does for any small business operator. Having the appropriate coverage will remove one potential worry when you start a contracting job.
Here are some things to consider when it comes to contractors insurance.
- Type of contracting work
Think carefully about the type of work you do and the potential risks involved. You’ll want coverage that addresses the situations you’re most likely to encounter.
For example, electricians often work in situations that are more technically sensitive and hazardous than other contractors. A mistake can impinge a corporate client’s business or a household’s functioning. In addition, electricians may work with faulty wiring and electrical charges that can give them severe shock or worse. They also work in tight places and at heights. They may require coverage focused on their profession.
As another example, excavation contractors operate heavy machinery, and their work may take them close to buried cables or power and sewer lines. A wrong move or inaccurate blueprint may result in an accident. Plumbers also frequently address emergencies and work not only with dangerous flood conditions but gas lines. These professions also need policies that account for the situations — which aren't typical in other industries — that they regularly face.
- Company size
Do you run a larger business that relies on multiple individuals? If your contracting business hires sub-contractors, that can affect the dollar amount of your policy coverage. You’ll want to make certain all sub-contractors you engage are covered by your policy.
- Geographic area
Urban locations may be at greater risk for property crimes, so contractors in urban areas may need larger policies than contractors in suburban or rural areas. Colder or wetter climates may present different problems than warmer, drier ones, such as moisture problems rotting building materials.
- A growing trend
Online communication has made it easier for employers and independent workers to find each other quickly. Expect the use of contractors to only increase in the years ahead, with the most skilled among them seeing steady demand for their services.
The last things busy independent professionals want to worry about are aftershocks from an accident or other unfortunate events. If you’re a contractor or about to become one, it's a wise idea to consult an insurance professional who can analyze specific risks and make recommendations about the type of coverage you need.
Nationwide has a full range of commercial solutions to help contractors find insurance so they can focus on building successful businesses.