Having commercial insurance for your contracting business is a must. As a contractor, you know that you encounter certain risks during each project. The same uncertainty holds as you start to pick the right insurance for your business.
At McGrath Insurance Group, we’ve seen a broad spectrum of commercial insurance challenges specifically for contractors pop up over the years. To help you avoid these common obstacles, here is a list of other Lake Ozark contractors’ biggest contractor-specific insurance challenges.
Proof of Experience
The length of time you’ve been in business matters when it comes to how much you pay in insurance premiums. Insurance companies typically look at new contractors as riskier, which narrows down which companies we can go to to get a preferred rating.
Many Camdenton contractors we work with have outsourced work to subcontractors at times (or all the time).
If you’re hiring subcontractors, you should verify that they have insurance. There are a few reasons why this is so important.
First, a subcontractor may make a mistake on the job that gives rise to an insurance claim. You want to be able to hold the subcontractor accountable and have them file the claim for the damage under their policy instead of yours. The same holds if a subcontractor gets injured on the job. They should file the workers’ compensation claim under their insurance rather than yours.
Likewise, the insurance company could penalize you. This is especially true if you received insurance as a sole proprietor but now have subcontractors filing claims under your policy.
The best way to protect your business when using subcontractors is to put a clear insurance requirement in your contracts so that no claims will be filed under your policy.
Acquiring a Performance Bond
Performance bonds are required when applying for specific projects. This is particularly true if you’re planning to do any work for the government or a utility company.
A performance bond is simply a guarantee for the work you’re contracted to perform, including the quality of the work performed and the completion date you agree to have the project finished.
Having a performance bond will help you win contracts, but it can also be hard to come by. You’ll need a high enough limit to honor the contract terms laid out by the person hiring you, the contractor.
Talking to your insurance agent before applying for these jobs is crucial. It’ll help you verify that you can get a performance bond high enough for the job.
Talking to your insurance agent about what you need, specifically commercial insurance for contractors, will help you understand which jobs to apply for, the type of protection you need, and how to avoid situations where you might not be adequately insured. This proactive approach will give you more predictable outcomes and cause less stress around your insurance needs.
We would be happy to speak with you about commercial insurance for your Camdenton contractor business. Contact us today to set up an appointment, and let’s discuss what you have now and what you could need for the future.