The construction industry has unique risks and challenges, from unprecedented delays to workplace injuries, stalled projects, labor issues, and legal hassles. Construction companies are willing to spend hefty sums for risk management through insurance.
Even small contractors handling parts of building projects, such as plumbing, HVAC, electrical, solar, cleaning, and masonry, should embrace the same mindset.
Statistics show that construction businesses and contractors in the US pay an average of $80 per month for general liability insurance. Digging deeper, 20% of them spend less than $50 per month, and 61% spend below $100 per month. However, the dollar figures might seem painfully high for small business owners.
As a contractor, you will surely need convincing reasons for not cringing about the expense. You should definitely go ahead without thinking twice because general liability insurance can be a savior in several ways. Let us explain how it can protect your business against various risk factors.
Offers Extensive Protection
Did you know that nearly 150,000 construction workers experience workplace injuries each year? And surveys show that 72% of projects get delayed for some reason. Even worse, cost overruns plague 9 out of 10 construction projects. The numbers are scary for contractors because they indicate the risks they may encounter during every project.
Fortunately, contractors’ liability insurance covers several risks for construction contractors. It is an excellent investment for business owners who don’t want to struggle in the event of a mishap, property damage, libel, or slander. According to Commodore Insurance Services, many contractors do not have the resources to deal with such unexpected events, but general liability insurance has its back.
From independent artisan contractors to small and mid-sized contractors, every business in the industry must look for coverage. It gives you peace of mind and extensive protection against known and unexpected challenges. Once you weigh the costs and benefits, you will not think twice about taking up a policy.
Fosters Business Growth
Besides securing your business against unprecedented risks, general liability insurance can foster growth. The industry is highly competitive, with 473,108 small and mid-sized specialty trade contractors operating in the US market as of 2020.
Even if you consider a specific location, getting contracts can be challenging. You need to position your business from a competitive standpoint to gain and maintain a market share.
Potential clients check several factors when it comes to deciding on a contractor they want to work with. Safety is a primary concern for them because of the inherent risks of the industry. Common questions regarding safety standards and insurance include:
- How do you train employees to complete the job properly?
- What safety procedures do you have in place?
- Is your business ready to continue projects in the event of an accident or emergency?
- What are your insurance limits?
Many clients expect contractors to stick with a specific liability insurance limit. You have to be there to attract bids and retain clients for the long haul in a competitive space. That’s an excellent strategy to grow your business.
Addresses Legal and Regulatory Requirements
Construction projects and businesses need to comply with the Occupational Safety and Health Administration’s health and safety regulations. They may also have to follow more regulations set by the analogous state agencies. Further, there could be legal guidelines around investing in liability insurance coverage.
With state and federal laws establishing clear guidelines for construction contractors, it is better to stay on the right side of the law. For this reason, liability insurance needs to cover your business for more than damage to customer property. It also ensures that you don’t have to deal with penalties and legal hassles for non-compliance in the long run.
You must look for a policy that offers coverage beyond accidents and safety issues. Also, look for one covering construction defects, infrastructure issues, and improper wiring or pipe systems. Likewise, job-specific risks may also determine your needs. For example, roofers require broader coverage than locksmiths or carpenters because of the higher job risk and additional regulatory requirements.
The Bottom Line
General liability insurance is a necessary expense even for small and mid-sized construction contractors with limited resources as it offers coverage for unforeseen risks. At the same time, it gets you more contracts and enables client retention for long-term business growth. Most importantly, it covers the legal and regulatory fronts for your business.
Skimping on it is the last thing you should do because it fortifies your business. The best way to achieve your insurance goals is by looking for a reliable provider and the right policy to fit your needs and budget.