All businesses need to have general liability insurance, and this holds true for independent contractors as well. This protects the business owner in case they or one of their employees cause harm to one of their customers, whether that’s physical harm or damage to their property. The rules and requirements about commercial general liability insurance vary from state to state but all of them require contractors operating in their state to have this type of insurance coverage before they can start doing business.
This type of insurance protects the business owner in a number of ways. As mentioned, if someone is harmed by the business than the insurance policy will cover the costs of any third party who was injured. Note that this insurance does not cover injuries suffered by employees of the business owner. That is only covered under workers compensation insurance coverage.
Wherever you are in the country like contractor liability insurance Needham MA the insurance policy will cover advertising injury. If another company claims that the business owner ripped off their advertising than the business owner can file a claim on their general liability insurance policy. Sometimes issues crop up after the contractor has finished a job. If the person that hired them feels that the job wasn’t done right, like a handrail on a deck falling off and a person falling off, they can sue the business owner. The general liability insurance policy covers these types of incidents under completed operations. General liability coverage for contractors generally starts at $300,000 per incident. Business owners can increase this coverage up to $1,000,000 with a commensurate increase in the premium they pay. If the business owner wants further protection, they can buy a commercial umbrella policy which starts at $1 million in coverage.
Another thing business owners should be aware of is that their general liability policy does not cover the liability coverage on the vehicles they use in their business. Any vehicles used in the operation of the business need to have their own commercial liability policy. If the business owner has a commercial umbrella policy, they can include their commercial auto liability policy(s) as well as the general liability insurance.
Most states have strict requirements for contractor insurance. When a contractor purchases a general liability insurance policy the agent will send the state a commercial certificate of insurance in most states. The state needs to have this certificate in hand before they will issue a business license.
If a state as has lax requirements involving contractor general liability insurance it can create a very bad situation as this news article illustrates. Idaho started to deregulate the trades including business owners in the construction industry. The result is that as general contractors no longer have any license requirements, including having general liability insurance, consumers are paying the price. Many contractors in that state are now doing jobs without any insurance and when it goes south all consumers can now often do is go after the assets of the business rather than having an insurance policy to rely upon.