Contractors liability insurance, often referred to as general liability insurance for contractors, is a critical insurance policy that provides financial protection to contractors and construction businesses. It covers a wide range of liability risks associated with the construction industry. Here’s a breakdown of what contractors liability insurance typically covers:
1. Bodily Injury Coverage:
Contractors liability insurance covers medical expenses, legal fees, and damages if a third party, such as a client or a member of the public, is injured on your work site or as a result of your construction activities. This coverage extends to accidents, falls, or injuries caused by your work.
2. Property Damage Coverage:
It provides coverage for damage to third-party property caused by your construction work. For example, if a contractor accidentally damages a client’s property during a renovation, the policy can cover the cost of repairs or replacement.
3. Completed Operations Coverage:
This coverage protects contractors even after a project is completed. If a construction defect or error becomes apparent after the project is finished and causes damage, completed operations coverage can provide protection.
4. Products Liability:
If your construction business manufactures or installs products (e.g., windows, doors, or roofing materials) that later cause injury or property damage, products liability coverage can protect you from related claims.
5. Personal and Advertising Injury:
This coverage addresses non-physical injuries, such as libel, slander, copyright infringement, or false advertising claims made against your construction business.
6. Defense Costs:
Contractors liability insurance covers legal defense costs, including attorney fees, court costs, and settlements, in the event of a covered claim or lawsuit.
7. Medical Payments:
It can provide coverage for medical expenses of individuals injured on your premises or as a result of your construction activities, regardless of fault. This coverage helps avoid potential lawsuits for minor injuries.
8. Fire Damage Coverage:
Some policies include coverage for damage caused by fire that results from your construction operations.
9. Additional Insureds:
Contractors often need to add clients, property owners, or subcontractors as additional insured parties on their liability policies. This provides coverage for these parties in the event of a claim related to your work.
10. Contractual Liability Coverage:
This covers liability arising from contractual agreements, such as indemnification clauses in contracts with clients.
11. Environmental Liability:
Some policies offer limited coverage for environmental liabilities that may arise from construction activities, such as accidental pollution or contamination.
12. Worker’s Compensation Exclusion:
Contractors liability insurance does not cover injuries to your employees. Workers’ compensation insurance is a separate policy that provides coverage for workplace injuries to employees.
13. Equipment and Tool Coverage (Optional):
Contractors may choose to add coverage for their tools, equipment, and machinery. This is typically offered as an optional coverage extension.
14. Commercial Auto Coverage (Optional):
If your construction business uses vehicles, you may need to add commercial auto coverage to protect against liability for accidents involving company vehicles.
15. Umbrella Liability Coverage (Optional):
Contractors can purchase umbrella insurance to provide additional liability coverage beyond the limits of their primary liability policy.
It’s important to note that the specific coverage and limits of contractors liability insurance can vary depending on the insurance provider and the policy’s terms. Contractors should work closely with an insurance agent or broker to tailor their coverage to their unique needs and risks.
