General Liability Insurance for Subcontractors
As a subcontractor, General Liability Insurance is one of the best policies you can carry while you work. Having insurance can be an effective tool to appeal to your employers. Although state law does not require it, employers would most probably include insurance as one of their requirements. They would typically check for a certificate of insurance. They may also ask you to mention the company as additional insured on your liability insurance policy. Most companies would suppose subcontractors to have General Liability Insurance.
Employers usually don’t cover for the liabilities of their employees. That’s why it is important for you to have your own insurance. It can protect you from potential risks that may arise when the business you work with faces liability risks. That is when General Liability Insurance comes to rescue.
WHAT IS GENERAL LIABILITY INSURANCE?
General Liability Insurance is one of the most important policies you must have. As a subcontractor, you can be exposed to potential risk if you don’t have the right policy. General liability insurance protects you from immense financial loss in case a third-party accident, damages, or lawsuits happen. For example, while working you accidentally destroy the floor with your sharp equipment. You can save your money from replacing the floor tiles because the General Liability Insurance is there to help.
Another example would be if you work in a clients home. While you are working with plumbing, you accidentally made a mistake. Instead of covering the hole, you created a bigger hole. General Liability Insurance can protect you from claims that will come from your client. Here is a list of what General Liability Insurance covers:
CALIFORNIA GENERAL LIABILITY INSURANCE COVERAGE
BODILY INJURY COVERAGE
It helps you pay for the medical fees when your work causes another person injuries. For example, you’ve put your screwdriver on the floor. Your client didn’t notice it and slipped causing him an injury. As a result, your client needs to stay in the hospital. Instead of you spending lots of money out of the pocket, bodily injury can cover it up for you. It can also compensate for the lost wages of your client because of inability to work.
PROPERTY DAMAGE COVERAGE
It covers repairs or replacements when you cause damages to your client’s properties. For example, you drop your hammer on your client’s glass table. The table was shattered thus making it unfixable. So instead of you spending money to buy a new table, property damage will help you pay for it.
PRODUCTS AND COMPLETED OPERATIONS COVERAGE
It gives you security when your tasks are done. As soon as you finish your work, your liability doesn’t stop there. If your work is done and it causes injury to someone, you will still be held responsible. For instance, you failed to secure the cupboard you attached on the wall. The cupboard sticks to the wall for a while. But after a few weeks, it falls and causes injury to a person. Products and completed operations can help you overcome the damages in this situation. It can help pay for medical bills as well as the legal fees if the client decides to sue you.
REPUTATIONAL HARM COVERAGE
It safeguards your business if someone files a case against you because of libel. If you’re a subcontractor and you own a subcontracting business, you are exposed to this kind of claim. For example, you or your employee mentioned something about another company and it affected their business. Reputational harm can help you pay for the legal fees that you need as you protect your business.
IS GENERAL LIABILITY INSURANCE FOR SUB CONTRACTORS A REQUIREMENT?
General Liability Insurance is not a legal requirement in most matters. In some areas, General Liability Insurance is a requirement to have a license for several professional contractors. Such as electricians and plumbers, whereas some states may consider surety bonds to have a license.
It’s common for customers to require General Liability Insurance before they involve themselves in business with a builder. If a customer hires a contractor and a disaster happens, the customer may cover for damages, instead of the contractor who doesn’t have insurance. In that case, a lot of customers will require General Liability Insurance before employing your business. Likewise, if your company works as a subcontractor to a general contractor, the general contractor can require you to have General Liability Insurance as well. It’s because the general contractor will sustain liability that their subcontractors’ accidents will cause.
GENERAL LIABILITY INSURANCE COST
The contractor’s General Liability Insurance average cost is around $1,000 yearly. It will depend on small companies with $500,000 and below their sales per year. Specifically, it’s essential to often take note of the increase of General Liability Insurance costs proportionately to revenue. Moreover, some kinds of contractors, such as roofing or general contractors, have higher risks. You can also consider exposures as high risks that can have two to three times the premium average cost or even more. Below are the types of risks your company encounters, depending on the costs of General Liability Insurance :
- The size of the business
- Location
- Industry
- Amount of workers
- History claims
LIST OF GLI PREMIUMS
Companies with higher risks will have higher premiums when you compare it to those that deem lower risk. For example, a circus will have higher liability premiums when comparing it to a graphic design company. Premiums rise as insurance limits increase. Different insurance businesses have different rating risk frameworks. Henceforth, comparing prices between different insurers is worth it.
For most small companies, $1 million per phenomenon and $2 million limit aggregate is appropriate in Commercial General Liability Insurance. Coupled with liability, providing strong security for your business is suitable for a commercial umbrella policy. That’s how much General Liability Insurance you need.
OTHER POLICIES FOR CONSTRUCTION BUSINESSES
Below are the other types of policies that you can consider. For this reason, General Liability Insurance covers only the necessary contracting risks and constructions.
WORKERS COMPENSATION INSURANCE
To cover medical bills of employees who sustain injuries in the workplace. It is a requirement for most states.
COMMERCIAL AUTO INSURANCE
Covers vehicles to contracting or construction businesses. It usually covers damages and accidents due to robbery, vandalism, and bad weather.
CONTRACTOR’S EQUIPMENT AND TOOLS INSURANCE
Covers replacement or repairs of equipment and contractors’ equipment if they sustain damage, loss, or stolen.
PROFESSIONAL LIABILITY INSURANCE
In case a contractor passes a deadline for a project, he’ll benefit from coverage for professional oversights and mistakes.
BUILDER’S RISK INSURANCE
Builder’s Risk Insurance covers ongoing damages under construction due to vandalism or fire on the construction workplace. In other words, damages happening during construction.
Overall, contracting and construction work is a job that cannot avoid risks. Accidents that cause injury to third parties to misfortunes that damage the properties of others. Such as property damage, bodily injury, advertising claims, and legal expenses.
General Liability Insurance provides the security that you need. Defense against other people’s claims of property damage, advertising, and personal injury. Accidents may happen even at a very unexpecting time. General Liability Insurance is a critical investment coverage because it ensures securing your business for its future. It is wise to get accurate pricing estimation from reputable insurance by getting a quote.
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