As a contractor, your business can be fraught with hazards. From accidental property damage and bodily injury to the threat of expensive lawsuits and potential reputational damage, these risks can cost you heavily. Luckily, you don't have to pay for every accident, claim, or lawsuit that threatens the health of your business if you have a contractor general liability policy in place.
Here are five reasons you'll want to protect your business with contractor general liability.
Protection Against Bodily Injury and Property Damage
One of the primary benefits of contractor general liability insurance is the coverage for third-party bodily injuries and property damage.
Third-Party Injuries
Consider the electrician contracted to undertake a major rewiring project at a local restaurant undergoing massive renovations.
During the time it took to complete the project, the electrician and his team often left equipment and tools on-site. One afternoon, a food delivery driver arrived with a restaurant shipment and, carrying a crate of fresh produce into the restaurant, tripped over a coil of electrical wiring left near the entrance.
The trip-and-fall resulted in a broken wrist for the delivery driver and a lawsuit against the electrician for compensation for medical expenses.
Without general liability in place, the contractor would've had to fund the legal costs and any settlements, draining his cash flow and business savings in the process.
With general liability in place, the insurance coverage is designed to cover the incident, preventing the electrician from paying for the significant financial costs out of pocket.
Third-Party Property Damage
Now let's look at the owner of an excavation company whose team was preparing the ground for the foundation of a new apartment building.
An enthusiastic excavator operator accidentally hit and severely damaged a retaining wall, knocking it down and damaging a home and vehicle on the adjacent property in the process.
Without general liability in place, the owner of the excavation company could find himself paying out of pocket for repairs to the affected building and vehicle.
With a general liability policy, the owner can file a claim with his insurance provider, which is designed to cover the costs of repairs and replacements from third-party property damage.
Protection Against Lawsuits and Legal Claims
Legal claims and lawsuits are a constant concern for contractors and construction business owners. Disgruntled clients may allege subpar work, or someone could get injured taking an unauthorized "tour" of a construction site.
Even if you go to court over an alleged wrongdoing and are found innocent, the cost to defend yourself can be astronomical.
Contractor general liability offers protection for your business by covering legal costs, such as:
- Lawyers fees
- Court costs
- Judgments or settlements
Whether you're in the right or the wrong, going to court can decimate your financial reserves. If your general liability policy covers your claim, you won't have to worry about the soaring costs associated with a court date.
Fulfilling Contractual Obligations
If you haven't run across this one yet, just wait. Because many project contracts, including larger commercial contracts or contracts with government entities, require contractors (and subcontractors) to carry certain types of insurance to get the job.
And you can be certain general liability will be on the list.
After all, the entity hiring you to do the work doesn't want to be financially responsible for your excavation mishap or electrical trip-and-fall incident.
When you're covered with general liability insurance, you can fulfill your contractual obligations.
Even better, you can get a competitive edge in landing contracts; your coverage demonstrates professionalism and fiscal responsibility to prospective clients.
Protection Against Reputational Harm
You're doing business in a digital world. This means you're more likely to face a claim or lawsuit for libel, slander, or advertising injury than you would've been in an analog past.
You think you were inspired by a competitor's website, logo, brand colors, and ad campaign. Your competitor, however, thinks you infringed on their intellectual property.
Your competitor could also be not-so-pleased by your recent YouTube video and social media posts comparing your services. You thought you were calling out the differences between your company and his, but he feels like you defamed him -- and now he's out for revenge.
General liability policies usually cover these types of advertising injuries and reputational injuries, including:
- Slander: oral defamation, like when you got on the YouTube video to point out your competitor's shoddy work
- Libel: written defamation, like when you Tweeted the story about the competitor's less-than-honorable business practices
- Copyright or Intellectual Property Infringement: use of another company's advertising themes or concepts, including logo and web designs
If your policy includes coverage for advertising injuries, your covered claim will help pay for legal fees, court costs, and any settlements/ judgments you may have to pay.
It's More Affordable Than You Think
The fifth and final reason to carry contractor general liability is:
It's more affordable than you think.
Many contractors pay around $100/ month for their general liability coverage. Your costs will vary depending on the details of your coverage and your specific business details, but you'd be surprised at how affordable this policy can actually be.
Some contractors save even more by getting a business owners policy (BOP), which combines general liability coverage with commercial property coverage.
Or your insurance carrier may bundle together multiple essential contractor insurance policies together to help you save with a custom solution.
Whether you purchase as a stand-alone or as part of a bundle, one thing is certain: contractor general liability is a must-have policy for any construction business owner that's serious about protecting their business and hard-earned profits.
Talk to your favorite insurance agent or broker today to get a quote for general liability insurance.