Are you a contractor who is baffled by the liability insurance system? Business contractor insurance liability can be difficult to understand, but it can be narrowed down to five key things.



Five Things Every Business Contractor Should Know About Liability Insurance





One size does not fit all.



Many contractors start out with a general, low limit basic liability plan. This option may leave you without proper coverage if you actually find yourself in a major lawsuit. Since the very purpose of having this insurance is protect you from the negative effects of being sued, it makes sense to take the time to evaluate exactly how much insurance you actually need. Maybe low limits are truly enough for you, but for many contractors that simply is not the case. As a business contractor, insurance liability and your own unique needs can be difficult to ascertain but it is very important you make an effort to discuss coverages with your broker and to carry the appropriate coverage.



Choose carriers wisely.



You may have noticed that there is a huge variance in the types of business contractor liability insurance carriers. While being low priced does not necessarily make an insurance carrier lower quality, some companies are indeed non-rated or non admitted companies that may not be there when its time to pay your claim. You wont be saving money if you end up paying years of premiums and then a hefty settlement because your carrier no longer exists. Thats why you want an A rated carrier and should check out every insurance carrier you are considering through your State Department of Insurance.



Be honest about your risk profile.



Once you have found the insurance carrier that is right for you. Your insurance company will probably ask about your business, steps taken to mitigate risk, and will confirm your annual sales, payroll and subcontractor costs. The information you supply can be a policy warrant. They may ask you about any previous legal action that has been taken against you and your company. The insurance company confirms the data on your application usually though independent inspection services so be straight forward with the information you supply.



Understand the scope of coverage.



Understanding exactly what activities are covered by your insurance is crucial to being adequately insured. Many policies contain construction limitation endorsements. You should know before signing a policy that all of your normal activities and even ones you only perform occasionally are completely insured. Any gap in insurance leaves you, your business and your family, at risk.



Find out about the insurance companys additional insured policy & special wording.



Many policies will automatically cover your clients as additional insureds, while others will charge you separately for each certificate. Some carriers will also charge you for special wording you may need.



Armed with these five steps, there is no reason to feel intimidated by insurance. Business liability insurance is a crucial purchase for contractors and being educated about your insurance is the key to getting the coverage you deserve.