There isn’t a one-size-fits-all approach to the insurance solutions a contractor or subcontractor may need. Regardless of how your business can acquire its insurance, the following can generally form at least a reliable core of financial protection:
Builder’s risk insurance—This coverage, also known as course of construction insurance, can provide critical financial protection for projects in progress and may help pay for losses arising from fires, theft, vandalism or severe weather.
General liability insurance—If your business or employees are responsible for an incident affecting a third party, such as a guest or client, this coverage can help pay for resulting losses, such as medical bills, property damage and legal expenses.
Commercial property insurance—This coverage can provide financial assistance for losses related to property used to operate your business. This may include, but is not limited to, your company’s offices, inventory, equipment and furniture.
Professional liability insurance—If a client accuses your business of providing services that were negligent, inadequate, late or otherwise breached contractual obligations, this coverage, also known as errors and omissions insurance, can help pay for your legal costs.
Workers’ compensation insurance—Legally required for most employers, this coverage can help ensure that you and your employees have the financial resources you need to manage the aftermath of workplace injuries and illnesses. This may include paying for medical costs, recouping reduced wages, benefits and, in the event of a lawsuit, employer legal expenses.
Commercial auto insurance—If your business uses motor vehicles on job sites or to transport materials, this type of coverage can provide financial protection and help pay for vehicle repairs or other losses for which you may be liable.
Equipment breakdown insurance—This coverage can help pay for costs and losses arising from broken or malfunctioning equipment, including repair or replacement expenses, lost income and spoiled inventory.
Commercial umbrella insurance—Whether you’re a contractor or subcontractor, you may be required to carry certain levels of liability coverage to bid on certain contracts. If your other liability policies lack sufficient limits, you can augment your portfolio with this form of secondary insurance, which can provide additional financial aid if other coverages are exhausted.
In addition to the above, your business may need additional financial protection. For example, if you regularly transport materials over land, inland marine insurance may be beneficial. Clients may also require you to purchase surety bonds to ensure they will be reimbursed if you fail to uphold your contractual obligations.