Insurance for contractors

 June 17, 2019     UFG Insurance    Business   Surety 


Being a contractor is a complex job – outside working in almost all conditions, dependent  on other people, other contractors and even governments. However, there are some things you can do to equip a “contractor insurance toolbox” and make sure it’s well-stocked so you may be covered for almost any situation.

Although every construction project is different, understanding the options for builders risk insurance is critical for your success – and for your peace of mind. 

General liability insurance

Also known in the industry as business liability insurance or commercial insurance, this may provide coverage for claims against you that caused bodily injury or property damage. This differs from coverage that protects you from injury or damage caused by professional mistakes or neglect. 

Errors and omissions insurance

Errors and omissions coverage (or E&O) is also known as professional indemnity insurance or simply professional liability insurance. An example of E&O construction insurance coverage in action: a contractor completes an electrical job in an office building. A few months after the building is occupied, a fire breaks out due to a faulty junction box and destroys the structure. Although a commercial general liability policy would provide property damage coverage to the building, the $35,000 in damages to the contractor’s work would be excluded. Contractors E&O coverage can provide coverage for this loss.

Equipment breakdown

Equipment breakdown coverage often covers mechanical and electrical equipment, both large and small, computers and communication equipment, air conditioning, refrigeration systems, and boilers and can pay for the cost to repair or replace the damaged equipment.

Business income

Making money is the goal, but what happens when a valuable piece of equipment breaks down? Business income insurance may help to ensure both you and your equipment can recover if that happens. Generally, a short waiting period is required, but this coverage may help recoup any lost income attributed to the inability to use equipment.

Commercial auto insurance

Coverage for a contractor’s vehicles is an obvious need, but did you know there are coverage extensions, coverage additions and policy condition changes that can improve the business auto policy for contractors? Here are just a few commercial vehicle insurance options that may be applicable to your contracting business:

  • Employees as Insureds – Provides excess non-owner liability coverage to cover the individual liability of employees using their own autos in the insured’s business.
  • Audio, Visual and Data Electronic Equipment Coverage – Extends coverage to permanently installed audio, visual and data electronic equipment with a $100 deductible and $1,000 maximum coverage.
  • Amended Fellow Employee Exclusion – Extends the Bodily Injury liability coverage to protect a Supervisory employee, on an excess basis, against a lawsuit brought by a fellow employee.

While specialty coverage may not be available in all areas, it’s always a good idea to talk through auto coverage options with your agent to best find what suits your needs.

Inland marine

While the name can cause some confusion, a simple answer is that this coverage is for property that is mobile and covers property that requires broader protection than what is provided in a traditional property policy. Because contractors move tools, equipment, supplies, and vehicles from job site to job site, this coverage can be invaluable.
Types of inland marine insurance policies applicable in the contracting industry include:

  • Installation Coverage covers all materials, supplies, equipment, machinery and fixtures that are owned by the insured or for which they are legally liable, that are to be installed while the property is at a construction site, in transit, or at a temporary storage location.
  • Contractor’s Equipment Coverage covers Scheduled Equipment and Unscheduled Equipment including their containers, spare parts and accessories.
  • Other supplemental coverages include equipment leased, loaned or rented from and to others and rental reimbursement.

Commercial crime

Provides different types of coverage for crimes such as employee theft, robbery, and forgery. Coverage can be combined customized to your specific needs.

Commercial umbrella

While an umbrella insurance policy is based on the basic idea of providing extra coverage – picking up where liability coverage ends – a commercial umbrella policy can be tailored to best cover the needs of a specific type of business.

Workers compensation

There are different coverages for workers compensation insurance, but in general terms, it provides wage replacement and medical benefits to an employee injured during the course of employment. In return for the benefits received, the employee relinquishes his or her right to legal recourse through a lawsuit. There are strict underwriting guidelines for this type of insurance, with an emphasis placed on specific criteria such as low employee turnover, good safety training and management support and involvement in maintaining a safe workplace.

Surety bonds

While construction surety bonds differ from traditional insurance coverages, it’s a critical component for some contractors. Put simply, a surety bond is a contract that guarantees you’ll fulfill your obligation and tasks. 
Keep in mind this is a short list of the options available as general contractors insurance. While coverages will vary by business and by state, a UFG agent can help guide you through the process of choosing the right coverages from our ArtisanPro® Insurance line we created specifically for small businesses. Don’t have a UFG agent? Find one in your area: Find a UFG Agent.

The information provided is for informational purposes only. Every attempt is made to ensure that the information is accurate; however, it is not intended to replace professional advice. For more information, see Disclaimers & Other Legal Documents.