General Liability Insurance for Contractor’s and Small Businesses
General liability insurance is perhaps one of the most important elements for a contractor and small business to have. Without it, your business could face a range of legal issues and limitations for which you’d have to pay for out of pocket. Learn more about what general liability insurance is and how to better protect your small business below.
What Is General Liability Insurance?
General liability insurance is coverage that protects your business in the event that someone claims bodily or personal injury, advertising injury, or property damage as a result of your business’s operations, products, or services. It’s also known as business liability insurance and is a particularly important coverage for small businesses to have if customers or clients interact with your company in any way.
What Does Contractor’s General Liability Insurance Cover?
General liability insurance is important for contractors and small businesses to help protect against claims. If someone makes a claim that they experienced injury or damage directly related to your business, general liability insurance will help cover your associated costs.
- Hiring a lawyer to defend your business, as well as other legal costs
- Any settlements you owe from a lawsuit
- A customer or client’s medical expenses
- Any repair you’re required to perform as a result of damage you caused
Contractor’s liability insurance typically does not cover employee injuries, auto accidents, workmanship quality, or punitive damages.
Who Needs Coverage?
It’s wise for all businesses to have this coverage, but it’s critical for small businesses that could experience significant financial distress in the event of a claim that leads to an unmanageable financial burden. When you have adequate general liability insurance, you don’t have to worry about a claim diminishing your livelihood.
Contractor’s Liability Insurance
Liability protection is vital for contractors given how many factors of the job can result in injury or property damage. Many clients will require proof of liability coverage from contractors in case you damage their property or equipment.
Home Business Liability Insurance
Home businesses can also be vulnerable to liability claims. If a client comes to your home for a meeting and slips, or if you accidentally plagiarise on your website or in marketing materials, you’re held financially responsible if there’s a claim. General liability insurance prevents you from having to take on these financial responsibilities out of pocket.
Small Business Liability Insurance
If your small business has a physical location, there are any number of liability issues you could run into, which is why many landlords require liability coverage. A wet floor could result in a customer’s broken arm. An unstable shelf could fall on a client. Broken glass could lead to a cut hand. It’s not just physical locations that are in danger of liability claims, however. A client could accuse you of slander, libel, or privacy violation resulting in reputational harm. All of these claims would be covered under a general liability policy.
|Contractors||Home Businesses||Small Businesses|
|Who Needs General Liability Protection?||In construction, many factors of the job can result in injury or property damage. Contractor’s liability Insurance protects contractors and their employees from significant financial distress in the event of a claim.||Many contractors & small businesses meet with clients out of a home office. General liability insurance protects against expenses that may arise if clients are injured visiting a home office. It also protects against plagiarism claims on both print & digital marketing materials.||For contractors and small businesses that have a physical office location, general liability protection protects against any potential injury that may occur to visitors. It also covers claims against small businesses for slander, privacy violation, and other complaints.|
|When Is it Required?||Contractor’s liability Insurance is required when starting any new project. You will be required by most clients to show proof of general liability insurance. It may also be required when obtaining certain licenses.||It usually isn’t required for home businesses, but general liability insurance provides your home business with an extra layer of protection.||Coverage may be required when leasing a storefront from a landlord.|
How Does Small Business Liability Insurance Protect Your Business?
Small businesses rarely have the financial protection large corporations do. A single claim made by a customer or client could financially ruin a small business fast. Having small business liability insurance and other recommended coverage prevents a small business from spending all funds to cover costs related to a claim. This coverage can be instrumental in keeping a small business afloat through a lawsuit.
How Much Does Business/General Liability Insurance Cost for Contractors?
The business/general liability insurance cost depends on a few factors, one being your industry. Industries that are prone to injury and damage given the nature of the work involved are likely to see higher rates. Other factors include:
- How long you’ve been in operation
- Your location and size
- The condition of your building
- Your insurance claims history
- Your policy details, such as coverage limits and deductibles
Is General Liability Insurance Required by Law?
This varies by state, but even if you’re not required to have general liability coverage in your area, it’s still an asset to protecting your business’s financial stability. You never want to be in a position of bankruptcy because a single claim depleted your finances. You’ve worked hard to establish your business, so make sure it’s protected. Work with a trusted coverage provider to understand your state’s specific insurance requirements.
How Can I Start Protecting My Small Business Today?
Buying business insurance upon starting your business is the best protection, and it’s easier than you may realize. First, consider the types of risks your particular business may face and the coverage needed to insure each. Next, find an agent you trust. A reputable agent will help you understand your state’s requirements and ensure you get the coverage best suited to your business’s needs. Assess rates, terms, and benefits offered by any agent you speak to until you find the coverage and conditions right for you.
Should I Get Other Liability Insurance Coverage?
There are other forms of coverage that can be beneficial in protecting your business. The more covered you are, the safer your business will be. Three additional forms of coverage you may want to consider for your small business or as contractors are professional liability insurance, limited liability insurance, and workers’ compensation.
Professional Liability Insurance
Professional liability insurance, also called errors and omissions, provides coverage in the event of claims resulting from mistakes made by your business. This could include something you did or something you didn’t do but should have. Common claims that a contractor’s professional liability insurance coverage could aid in are negligence, copyright infringement, and personal injury, such as libel or slander.
Limited Liability Insurance
Whereas general liability insurance protects a company as whole, limited liability insurance protects individual people. For instance, if there are multiple owners of a business that is sued, having an individual limited liability insurance policy will protect each person’s business assets in the company. It’s the responsibility of each individual to seek this coverage. For contractors, note that a contractor’s liability insurance is different from a contractor’s bond.
Workers’ Compensation Insurance
Workers’ compensation insurance is especially important in industries where injury to employees is a possibility. Worker’s compensation covers the cost of medical benefits and wage replacement if an employee is injured while on the job in exchange for the employee’s mandatory agreement not to sue the employer.