What Are the Limits of Liability Insurance for Contractors?
Being properly insured can help you keep your business going, even when things go wrong. There are all kinds of policies, and liability insurance backs you when someone blames your business for an error or accident. With this information, you’ll know the common limits of liability insurance policies you might have for your construction business.
How Does Liability Coverage Differ from Other Kinds of Insurance?
As a business owner, you might have a variety of insurance policies. If you own a space for your business, you will need to insure it to protect the structure and your assets on the property. Businesses with employees need to pay workers compensation insurance, in the event that they are injured on the job. Although you might get liability insurance as part of a package with other policies, it is a unique type of insurance you must consider. Liability insurance protects your business in case you are held liable for some action or accident.
When Do I Need Liability Insurance?
Liability insurance covers your business up to a certain amount, determined by your insurer when you create the policy. Without the insurance, anyone who had cause to claim you are liable could possibly make you pay out of your business assets. There are a few common circumstances in which you might need to call on your liability insurance policy. They include:
- injury: if someone is injured as part of your project
- product: if the product you sell causes harm in some way
- damage: if someone in your business damages others’ property while on the job
There are other types of insurance that might apply in these scenarios, as well. For example, injuries of your workers is likely covered under your workers comp policy.
Are Liability Insurance and Builder’s Risk Insurance the Same?
Liability and builder’s risk insurance have some overlap in the type of coverage they provide, but they are not exactly the same. Liability coverage is related specifically to your business’s liability. It is intended to add a layer of protection in the event that your business is responsible for accident, damage, injury on the job site or at your work location. It will not cover damage to your property, equipment or materials in the course of that event. That’s the kind of thing builder’s risk insurance will cover.
How Do I Determine the Right Amount of Insurance?
As you can probably imagine, the coverage you need depends heavily on the industry you work in, and the type of work you do. While you look at the standard options, remember that the coverage is designed to provide for attorney’s fees and damages awarded to a plaintiff. These maximum limits can be significant, running hundreds of thousands or even millions of dollars in total liability. If you don’t have enough insurance, you will have to pay the rest from your business. Your insurance agent can help you assess the risk level based on your industry, and find the right amount of coverage you need.
Working in construction presents some risk to your person, as well as your assets. Liability insurance helps you to keep your business running, even if you’re held liable for a project gone wrong. Understanding how liability insurance and its limits make it easier for you to pick the best coverage for you. To start building your career in construction, contact CSLS today!
