Other Options for Small Contractors Insurance
While property and liability coverage are the two main components of any small contractors insurance policy, there are also several potential add-on coverages’s that you might want to consider. Below, we have listed some of the most crucial options to discuss with your broker to design a small contractors insurance policy. Your insurance broker should advise you on each of these categories. Your broker should also let you know if your carrier can provide the relevant coverage as part of your contractor’s policy.
Builders Risk Insurance
This type of coverage protects builders and contractors throughout their projects. Say you are working on a project, such as a renovation of a house that you’re building for a client. Ideally, you will finish the project to the client’s satisfaction, get paid, and walk away happy. If your work becomes damaged before completion, this type of coverage will cover your losses. Builders risk insurance is especially important for contractors who are working on construction projects. In these situations, contractors often put up the costs for materials themselves or ask clients to pay a deposit to cover initial expenses. If your work is damaged or destroyed ahead of completion, you’d have made that investment with nothing to show for it.
If your profession involves bidding on construction jobs or other projects, then you may need this type of surety bond. A bid bond protects you if you bid on a project but are unable to perform the work. Perhaps you misunderstood the job at hand, or maybe you discovered complications with the project that made it impossible for you to tackle the task. In such a case, your bid bond will pay the difference between your bid and the closest bid from a rival contractor. This type of coverage means you aren’t paying out of pocket to leave a proposal behind. In most cases, you cannot make a bid without a bid bond.
Performance bonds
Bid bonds are essentially a type of deposit that contractors make when they submit a bid. Performance bonds, meanwhile, serve as a guarantee to the owner of the project that work is going to be completed based on a contract. If you finish half a job but cannot complete the work, the owner of the contract can file a claim against your performance bond. The performance bond can then compensate the client for any costs associated with your incomplete work.
Contractor’s pollution insurance
This type of coverage offers special liability protection if your work should harm the environment through pollution. Polluting or poisoning the environment—be it the air, a stream, a groundwater source, or something else—is not covered under standard liability insurance.
Wrap-up liability coverage
Wrap-up insurance is intended for large contractors taking on projects with bid values of $10 million or more. It is mostly a blanket liability insurance policy that covers a contractor and all their subcontractors. Wrap-up policies can also include vehicle coverage, property insurance, and more.
