
Why do Contractors need Insurance
Whether you work independently or you have a huge employee base working for you, if you are involved in the construction business in California or Texas state then you must hold valid contractors insurance. Those who are associated with construction contracting businesses, especially the owners often come across risks and challenges in their profession like accidental damage to equipment or being sued for an error in a particular project, etc.
As these lawsuits are expensive, without the support of valid insurance the significant amount of cost might even hamper their business operations. In order to make their business foundation strong, contractors need insurance.
Here are 5 types of contractor’s insurance coverage available for different purposes in California.
- Business property insurance
This particular insurance is for construction contractors who run their business operations from a specific location like a home office or a leased space. This is where business property insurance comes in the picture when the property gets damaged. For instance in case a construction contractor’s office space is damaged due to fire, business property insurance will cover the cost of repairing the space. One thing is to be noted here that, if an business owner runs his business from a home office then his home insurance policy may not cover the loss.

- Commercial general liability insurance
As mentioned above, if any kind of damage or injuries occur during the construction work, the contractor can even be dragged to court for it. Commercial general liability insurance for contractors supports them with the legal expense in such situations. In simple words, if a contractor causes damage to a property during their work, the commercial general liability insurance will bear the repairing cost or potential legal expenses.
- Commercial auto insurance
Vehicles are frequently used in construction work. In case of any damage to such vehicles or even if it is stolen during work then commercial auto insurance will pay the costs of renting another one while the damaged one is being repaired. However, if the contractor uses his personal vehicle during duty then personal auto insurance may not cover the loss.
- Equipment and tools insurance
Just like any other business, construction business also needs specific tools and equipment’s. Equipment and tools insurance coverage helps construction contractors bear the rental fees or replacement expenditure if the tools or equipment is stolen or damaged.
- Professional liability and errors coverage
Legal action could be taken against a contractor, if he missed any vital information or provided wrong information which impacted the client. Professional liability and errors and omissions coverage would cover the cost of legal lawsuit in such situations.
Learning about different types of construction insurance and how they can help contractors can be extremely helpful for them. While choosing your business insurance policy, you need to consider certain things like insurance limits, coverage and payout instead of focusing on the cheapest contractor insurance. Go for the one that is affordable and secure.