The contracting business is full of unpredictable risks. From worksite accidents to property damage, a single unexpected event can create major financial problems. This is why securing the right contractor insurance is not just a good idea; it is a critical step for protecting your business and your livelihood.
This type of policy is designed to cover the project itself, your workers, third parties, and your equipment against losses or damage that occur during development.
To help you navigate the process, here are four essential tips for purchasing the right coverage.
- Verify Your Carrier Can Handle Common Industry Endorsements
Before you buy a policy, ensure it can meet the requirements of the projects you will undertake. Some insurers claim to specialize in contractor insurance but cannot add standard endorsements, such as an “additional insured” endorsement, which is often required by clients.
If your insurance carrier cannot provide a specific endorsement, you risk having to find new insurance at the last minute or turn down a project. Choose an insurer that is compatible with your business goals to avoid missing out on valuable opportunities.
- Ensure Your Business is Classified Correctly
One of the most common sources of premium discrepancies is the misclassification of a contractor’s business operations. A misclassified quote might look cheaper initially, but it will almost certainly be caught during your first audit. This will likely result in a surprise additional premium you must pay.
Beyond cash flow issues, misclassification can lead to coverage gaps if the policy does not accurately reflect the work your business performs. It is always better to pay the correct premium from the start than to face an unexpected adjustment later.
- Be Wary of Suspiciously Low Quotes
If you receive a quote that is significantly cheaper than all the others, proceed with caution. While a low rate can sometimes be legitimate, it often signals a problem.
The issue could be inadequate coverage, a payroll reporting error, or a business misclassification. These errors will be discovered during an audit, and you could end up owing more money than if you had chosen a correctly priced policy from the beginning.
Insurance companies will make you pay the premiums you were supposed to if these issues are discovered during an audit.
- For Significant Subcontractor Use, Choose a Specialty Carrier
If you subcontract out more than 25% of your labor, you likely need an insurance company that specializes in this business model. Standard carriers may not adequately cover your liability for subcontractors.
Using many subcontractors with a carrier that discourages it can lead to policy non-renewal, liability exclusions for your subcontractors’ work, or steep additional premiums. Protect your business by choosing a carrier that understands and welcomes contractors who use subcontractors.
Secure the Right Protection for Your Business
The best insurance company for contractors offers a fair price for a quality policy and has the expertise to help you meet job requirements and handle claims efficiently.
Finding the right coverage can be straightforward, but consulting a professional can ensure you make the best choice for your specific needs.
Ready to protect your contracting business? Contact ONYX Insurance Brokers for expert guidance and a personalized quote tailored to your work.
We’ll help you shop around for the correct insurance carrier, and handle any endorsements needed to get your work completed.
