This article was originally published by Grand Mutual Insurance Services (GMIS), a proud part of the Peak Companies.
Contractors, construction companies, debris removal services, and freelancers who work in the construction industry need general liability insurance to protect themselves from liability in the event of an accident or mishap. Most states require contractors to carry this form of insurance. Moreover, many potential customers won’t hire contractors that don’t carry this policy, especially for large jobs. A general liability policy shows customers that you’re serious about their safety and wellbeing, and able to provide compensation in the event a mishap occurs on the job site.
What does General Liability Insurance Cover?
General liability insurance covers specific risks common to the construction industry. One of the most important forms of coverage is bodily injury coverage. If, for instance, your customer has a bad fall while looking over the job site, bodily injury coverage will pay for the customer’s medical bills. It will also cover legal costs if the customer decides to take you to court over the matter. However, it won’t cover any injuries your workers may incur while working on a job site. You’ll also need a worker’s compensation insurance policy to cover your employees in the event of an accident.
General liability coverage also includes property damage. For instance, if you dig up the wrong plants, drop furniture while moving it, or break a window while doing other repairs, general liability coverage will cover the cost of repairing or replacing damaged objects. Like bodily injury coverage, it also covers legal bills related to the incident.
Personal/advertising coverage covers legal costs related to slandering or making false statements about another company. For example, if you tell a customer that a particular company isn’t insured or can’t do a particular job when this isn’t in fact the case, the other party can sue you for slander. Personal/advertising coverage covers legal costs related to such a situation. This includes settlement costs if you come to a deal with the other party.
Completed operations liability coverage is essentially a warranty for contractors in the event damage occurs after the job has been completed. For example, if you install fire alarms, and they stop working after a few months, the client can sue you for damages. Completed liability insurance covers legal costs related to such claims, including legal costs, court-ordered damages, and settlements. It should not be confused with an errors and omissions insurance policy, which covers claims related to poor workmanship, unfinished work, or the use of faulty products. This policy is different from completed operations liability coverage because it covers claims not related to a particular incident or form of damage. For example, if your client claims the paint color you used is different from what’s listed in the contract, errors and omissions insurance will cover legal costs if you’re sued.
While the above policies are the most common ones covered by a general liability insurance package, there are also specific forms of coverage that may apply to your line of work. If you have expensive tools that you rely on to do your work, you may want equipment coverage. It covers the cost of repairing or replacing these tools if they’re broken, stolen, or damaged. However, bear in mind that this coverage doesn’t include vehicles. You’ll need a commercial auto insurance policy for your vans, trucks, and cars.
You may also want to consider data breach insurance to protect yourself from claims related to a cyberattack on your IT system. Hackers often target small businesses and the construction industry is one of the top three most common targets. Data breach insurance covers legal costs if customers, suppliers, and/or business partners take legal action against your firm over the loss of their personal information. It can also cover the cost of notifying affected third parties about the breach, offering affected individuals credit monitoring, and improving your IT cybersecurity to prevent future hacks.
General liability coverage is an expense that can save you a lot of money long-term. It also improves customer perception of your brand and business as potential clients realize that you’re honest and trustworthy. Thankfully, it is possible to obtain this coverage at a minimal cost. Grand Mutual Insurance Services specializes in providing a range of business insurance policies for small business owners and entrepreneurs alike. We’re familiar with state laws in all 50 states to help you select coverage options in line with state regulations. We offer insurance bundles and custom policies to meet your exact needs without breaking your budget. Get in touch with us at your convenience to find out more about our policy options or to buy a policy that meets your exact needs.
Have questions? Our team at GMIS is here to help.
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