Contractors Liability Insurance - What's Covered And What's Not Covered

Contractors Liability Insurance protects you, the contractor against liability in specific areas. This article will explain some things that are covered along with some things that are not covered.

Structural damage caused by a contractor or one of his employees to someone's home or business will be covered by nearly all contractors liability policies. The contractor's insurance company typically pays to repair or replace any property that is damaged.

Any bodily injury caused by a contractor on a work site will also usually be covered. Additionally, the insurance will cover medical expenses of the injured party. If the individual sues, the insurance company will help pay for legal fees and damages.

Contractors Insurance will cover unexpected damages that can occur. Here are a few real examples that have happened on job sites in the past…

When working in someone's home, a water pipe could break and flood the house. While using a blowtorch, a fire could occur. These incidents would be covered.

Expensive tools kept on a work site or in a business vehicle would be covered. They are a prime target for theft.

Of course, contractors liability insurance should not be confused with workers compensation insurance. Most states now require employers to carry worker's compensation insurance as well. This pays for workers injuries and illnesses that occur while employed by you the contractor. If you hire sub-contractors and they do not have this coverage, your policy should be written to cover it.

If you're thinking that your automobile insurance might cover you in most cases, think again. Your personal auto insurance policy can not and should not be used to cover your business vehicle. Business-rated auto insurance will prevent gaps in coverage and possible declined claims.

Another type of insurance contractors should be aware of is "Risk insurance" also known as builders risk insurance or construction insurance. This type of insurance covers the building materials being used on the project. These materials are covered for theft and vandalism.

As with all insurance policies, there are exclusions that your Contractors Insurance will not cover. One of the most common exclusions involves water. A contractors policy can be seriously compromised if a building project has been exposed to moisture. The vast majority of contractors insurance policies will not cover damage caused by a broken toilet seat, a leaky pipe, an appliance malfunction or the discovery of dry-rot.

Your liability insurance does not pay if a customer refuses to pay or is not satisfied with the work. Some other examples of what is not covered would be a homeowner dissatisfied with the color of a new deck. If a new tool gets broken, it will not be covered. If the contractor uses the wrong material and the job is ruined, it will not be covered.

Contractors liability insurance does not cover shoddy workmanship. A homeowner cannot claim that the builder caused high heating and cooling bills. They cannot claim a loss of value to their property because of poor workmanship.

The important thing to remember is that all contractors liability insurance policies are not the same. Each insurer has his own guidelines to follow. Different polices can be offered to meet a contractors specific needs. Now that you know a little more about what's covered and what's not, contact an insurance broker and get your business covered. The more knowledge you have about Contractors Liability Insurance, the more pertinent your questions will be.