Embarking on a journey as a new contractor brings forth lot of exciting opportunities and challenges. While it’s exhilarating to dive into the world of entrepreneurship, it’s equally crucial to fortify your business against potential risks and liabilities. As you set sail on this entrepreneurial voyage, one of the most critical aspects you shouldn’t overlook is protecting everything that you have worked so hard to build. In this blog post, we’ll delve into seven essential insurance policies every new contractor should prioritize to safeguard their business and ensure long-term success.
My experience has taught me that many new contractors feel that they are being “beaten over the head” with insurance costs. This can be super frustrating and I have seen that often times insureds don’t even know what they are buying. I have helped countless developing businesses make sure that they are correctly insured and the goal of this blog is to give you a quick cheat sheet to reference when you are trying to remember which insurance does what for your business, but also why these basic lines of coverage are needed for your business at all.
Coverage Overview
1. General Liability Insurance: General liability insurance serves as the bedrock of protection for contractors. It shields your business from financial repercussions arising from third-party claims for bodily injury, property damage, and advertising injury. Whether it’s a client slipping and falling on your job site or accidental damage to a client’s property during a project, general liability insurance provides coverage for legal fees, medical expenses, and property repairs. With this policy in place (so long as it has been placed by a well-qualified broker, with your best interest in mind), you can conduct your business with confidence, knowing you’re shielded against common liabilities.
2. Excess Liability Insurance: While general liability insurance offers crucial protection, some situations may exceed its coverage limits. Excess liability insurance, also sometimes referred to as umbrella insurance, steps in to provide additional coverage once the limits of your primary policies have been exhausted. This extra layer of protection is invaluable for contractors, especially when facing large or complex claims that could potentially threaten their business’s financial stability. By securing excess liability insurance, you can rest assured knowing you have added financial protection beyond the basic coverage.
3. Commercial Auto Insurance: For contractors who rely on vehicles for business operations, commercial auto insurance is indispensable. This policy provides coverage for vehicles used for business purposes, including company-owned cars, trucks, and vans. Whether it’s transporting equipment to job sites or making client visits, commercial auto insurance safeguards your vehicles against accidents, theft, vandalism, and other unforeseen incidents. By ensuring your vehicles are adequately protected, you can minimize disruptions to your business and maintain smooth operations.
4. Workers Compensation Insurance: Your employees are the backbone of your contracting business, and their safety should be a top priority. Workers compensation insurance provides financial assistance to employees who sustain work-related injuries or illnesses. It covers medical expenses, rehabilitation costs, and lost wages for injured workers, while also protecting employers from potential lawsuits. By prioritizing workplace safety and investing in workers compensation coverage, you demonstrate your commitment to your employees’ well-being and foster a positive work environment.
5. Inland Marine Insurance: Contractors often work in diverse environments, from construction sites to clients’ properties, making their equipment and tools susceptible to various risks. Inland marine insurance fills the gap in coverage left by standard property insurance policies by providing protection for movable property and equipment that is frequently transported or used off-site. Whether it’s tools, machinery, or building materials, inland marine insurance ensures your valuable assets are safeguarded against theft, damage, or loss, wherever they may be.
6. Employment Practices Liability Insurance (EPLI): Managing a team of employees comes with its own set of challenges and potential liabilities. Employment practices liability insurance (EPLI) offers protection against claims alleging wrongful employment practices, such as discrimination, harassment, wrongful termination, or violation of employment laws. In today’s litigious environment, even the most well-intentioned employers can face costly legal battles. EPLI provides coverage for legal defense costs, settlements, and judgments, helping contractors mitigate the risks associated with personnel management and maintain a compliant and respectful workplace culture.
7. Cyber Liability Insurance: In an increasingly digital world, contractors are not immune to cyber threats and data breaches. Cyber liability insurance provides coverage for expenses related to data breach response, cyber extortion, legal fees, and regulatory fines. Whether it’s sensitive client information stored on your computer systems or financial transactions processed online, cyber liability insurance helps protect your business against the financial and reputational fallout of cyber incidents. By proactively addressing the evolving threat landscape of cyberspace, contractors can safeguard their digital assets and maintain the trust and confidence of their clients.
Conclusion
In conclusion, as a new contractor, investing in comprehensive insurance coverage is essential for protecting your business against a wide range of risks and liabilities. From general liability insurance to cyber liability insurance, each policy plays a crucial role in safeguarding your business’s financial stability, reputation, and long-term success. By prioritizing risk management and securing the right insurance policies, you can embark on your entrepreneurial journey with confidence, knowing you have taken proactive steps to protect your business and its future.
This blog is designed to help you understand the basics, but what a good broker can offer you is years of knowledge so that you can rest assured that there are no exclusions or holes anywhere in your program that could leave your business exposed. I tell people all of the time that “One of the worst things you could ever do is buy insurance to not have insurance when you need insurance.” It is worth your time to vet your insurance broker so that you can rest assured that you have a partner that you like and trust to help you progress to whatever level you desire, and that also has the skills to custom tailor your insurance program to your needs. Just as every project that you contract is different so should be every insurance program. At Swarts Manning & Associates we pride ourselves in constantly striving for perfection, so that as you handle the daily tasks of chasing your dreams and growing your business insurance isn’t something you have to worry about on a day to day basis. If you are feeling that insurance is taking too much of your time, energy and money, let’s set up a time to talk so that we can custom tailor a strategy so that you can free that mental space up to focus what you do best, as well as sleep a little better knowing that you have a broker doing everything possible to protect your bottom line.
Each month, Swarts Manning insurance experts cover relevant topics for your business. Stay tuned for more discussions about managing your insurance and industry-specific tips.
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