Being an independent contractor is risky business. Sure it is nice to be your own boss, set your hours and decide which jobs you want and which you don’t. But, there are also a lot of downsides. Finding work lands squarely on your shoulders, oftentimes you have to manage a workforce, you are responsible for all the subcontractors you hire, making sure everyone meets their deadlines, you have all of the interaction with the client, meaning that if there is a problem, the heat will fall on you, and you take on all of the responsibility if something goes wrong.
General contractor liability insurance helps to mitigate some of the risks associated with damage to property or injury that occurs on the job. Insurance is something that is required on all jobs, though the requirements are different from situation to situation.
As a general contractor, you will hire many subcontractors to perform specific tasks. These specialists have extensive experience with one part of the project, such as tiling, roofing, laying foundation, etc. One job may require as many as ten subcontractors, each performing a job where something may go wrong. Every subcontractor must have their own insurance, however, a general contractor is often the point person to figure out what went wrong and who is to blame. This is often a difficult task and insurance companies will only pay out after a thorough investigation.
The insurance company will pay an attorney if a lawsuit is brought about to recoup the costs of damages and the cause of the damage is unclear. The problem is, they will only pay for defense if the damage is something that es written in the policy. Insurance policies are written by lawyers and have very detailed language on what is and isn’t covered. Find an insurance agent that you trust and make sure everything in the policy is explained.
Things that aren’t included in general contractor liability insurance are criminal activities, professional negligence, and unfair or discriminatory personnel claims. For construction, most insurance carries an xcu exclusion. These are explosion, collapse, and underground exclusions, which means the insurance does not cover any damage related to any of this work. Supplemental insurance is available, but it must be specifically requested.
Monetary amount and kinds of coverage vary depending ono the job and the extent of work being performed. Some work is more dangerous than other or there is a bigger risk of damage. If you are working on a roof or a high rise, workers comp will have a higher premium. If you are doing demolition or have to use fire or explosives, the premiums will also be higher, and supplementary insurance is necessary.
General contractor liability insurance certainly helps to mitigate personal or professional liability but it is not a catch all. Do research and understand what the policy’s limitations.
