Insurance For Artisan Contractors: Top Policies to Protect Your Business
Artisan contractors typically perform their own work, including electrical contracting, plumbing, roofing, and countless other unique trades. While a general contractor may hire contractors to work on a project, artisan contractors have a trade specialization and are usually self-performing work on a job site. As a result, artisan contractors face specific challenges that general contractors might not.
“A big challenge for the industry is the lack of skilled labor in individual areas,” says Central’s Director of Construction Underwriting Scott Zemberi. More than one in five construction workers are 55 or older, meaning that retirement will continue to contract the industry’s workforce.
The U.S. construction industry must attract about 500,000 new skilled workers in 2024 to balance supply and demand. “An artisan contractor business can be a one-man operation or a company that employs a large number of trade contractors,” Zemberi explains, “The concern is that there are plenty of people to do the jobs, but it’s hard to find folks who are skilled and knowledgeable in a specialized trade.”
As an artisan contractor in such a unique occupational landscape, you must have adequate insurance coverage to protect your business and give you the peace of mind to focus on what matters most. Insurance can cover your business against risks, from liability claims to equipment damage, ensuring that you can focus on delivering quality craftsmanship without worrying about unforeseen setbacks.
This article explores expert insights from Zemberi and offers tips for better understanding the essential insurance policies you need to protect your contracting business.
Top Insurance Policies for Artisan Contractors
Prioritizing insurance coverage can create a safety net amongst the construction industry’s challenges. Your business insurance needs will depend heavily on your trade specialization. Let’s break down some of the top policies you need.
Remember: Check with your insurance agent to ensure comprehensive coverage.
1. General Liability Insurance
General Liability insurance covers third-party claims for bodily injury, property damage, and personal injury. This policy protects you from potential lawsuits and financial liabilities from accidents or damages caused by your work.
Zemberi advises ensuring your liability insurance has completed operations insurance to take full advantage of this coverage. In general, GL insurance is crucial for contractors, as it covers property damage or injury caused by your current operations and work performed in the past.
“It’s important to ensure you have appropriate coverage that will protect you for several years after the project is done,” Zemberi says. “If you do a wiring job on a building and a fire breaks out years later due to faulty work, you can be sued over the property damage and bodily injury for folks hurt in the fire.”
Who Needs This Coverage? All contractors benefit from this policy.
2. Workers’ Compensation Insurance
Workers’ Compensation insurance provides medical benefits and wage replacement to employees injured or who become ill due to their jobs. It also protects the employer from potential lawsuits filed by injured employees.
For example: Imagine you employ several contractors to paint walls on a renovation project, and one falls from a ladder. Workers’ Compensation insurance covers these expenses, ensuring the injured employee receives the necessary medical care and wage replacement. You may be responsible for the employee’s medical expenses and lost wages without this coverage.
Who Needs This Coverage? All contractors with employees need this policy, especially those in physically demanding trades like roofing and masonry.
3. Commercial Auto Insurance
Commercial Auto insurance covers vehicles used for business purposes, protecting against accidents, theft, and damage. This policy is crucial for artisan contractors as it covers the vehicles transporting essential tools, materials, and equipment.
Suppose your work van is involved in an accident on the way to a job site. Commercial auto insurance will cover the repair costs, medical expenses, and any third-party liability claims in that case. Additionally, if the vehicle is stolen or vandalized, the insurance would cover the replacement costs, minimizing downtime and financial loss and ensuring you can continue your work without significant disruption.
Who Needs This Coverage? Contractors who use automobiles in the operation of their business.
4. Contractors Errors and Omissions Insurance
Also known as (E&O) insurance, this policy gives the contractor valuable protection for some exposures traditionally excluded under general liability coverage, namely damage to your work, damage to your product, or damage to impaired property.
“Imagine an electrical contractor wires a building poorly, and it subsequently burns down. The general liability policy will not cover the work to the damaged electrical, but will cover the resulting property damage from the fire,” Zemberi says. Errors and Omissions insurance can provide coverage for the damage to your work or your product.
Who Needs This Coverage? Contractors who self-perform their own trade construction work.
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5. Inland Marine Insurance
Inland Marine insurance protects unique property excluded or covered on a limited basis under a standard commercial property policy. For contractors, it can cover tools, equipment, and materials transported to and from job sites and items stored at job sites or temporary locations.
Who Needs This Coverage? Mobile contractors, like HVAC technicians and electricians, who rely on transporting their equipment, and contractors who own or lease specialized construction machinery or equipment.
6. Commercial Property Insurance
Commercial Property insurance protects a contractor’s business property—including buildings, equipment, and inventory—from risks such as fire, theft, and natural disasters.
Who Needs This Coverage? Contractors with physical business locations or mobile offices.
7. Umbrella Insurance
Umbrella insurance provides additional liability coverage beyond the limits of a contractor’s existing policies, offering extra protection against significant or catastrophic claims.
“A lot of the contracts artisan contractors sign will have specific insurance limit requirements,” Zemberi says. “A general contractor may hire an electrical contractor and require that they have $5 million worth of liability coverage. In these cases, contractors may seek to purchase umbrella insurance to provide the appropriate limit for that contract.”
Who Needs This Coverage? All Contractors, particularly those who are regularly subject to contractual requirements.
8. Electronic Data Liability Coverage
Electronic Data Liability coverage applies if a contractor damages property, causing a loss of data or information.
“For example, an excavation contractor could dig a hole for a water line to be put in and damage a cable line while digging, resulting in neighboring businesses losing their data coming through that line,” Zemberi says. “Coverage like this would help pay for that loss.”
Who Needs This Coverage? Contractors concerned that their work may cause data loss by striking a line or damaging electrical property should purchase this coverage.
9. Business Owner’s Policy
A Business Owner’s Policy (BOP) combines several essential coverages into one comprehensive package, typically including general liability, commercial property insurance, and business interruption insurance. This policy is especially beneficial for artisan contractors as it simplifies the insurance process and can be more cost-effective.
Central’s Business Owner’s Policy (BOP) offers various coverage options for building and business personal property and business liability. It is an excellent option for contractors looking for a simple insurance solution.
Who Needs This Coverage? All artisan contractors, particularly those who consider themselves small businesses, should consider this policy for complete and efficient protection.
Loss Control for Artisan Contractors
Alongside insurance coverage, loss control is crucial for artisan contractors as it helps minimize the potential for accidents, injuries, and other costly incidents on job sites. Implementing effective loss control measures, such as regular safety training, proper equipment maintenance, and adherence to industry standards, can reduce the likelihood of claims and legal disputes.
“At Central, we want to be a resource to our clients and be there directly to support them,” Zemberi says. “If clients have questions about a job site, proper techniques, or contractual requirements, Central has underwriting and loss control resources to help them work through it.”
Learn More: Central’s Loss Control Program
Jim Johnson, Central’s dedicated loss control construction specialist, works closely with construction clients to evaluate job site exposures and prevent losses. His expertise leads a team committed to protecting the people our policyholders employ by improving overall site safety and reducing claim deductible dollars for policyholders.
Central loss control specialists will work with you free of charge to create a personalized plan, provide on-site training and evaluations, and keep your business, assets, and employees safe. Supporting our policyholders by preventing losses is an important part of our commitment to caring for those who trust us as their carrier.
The Central Difference
At Central, our dedicated Construction team focuses on adding value to our partnerships. Specialty contractors can avoid costly insurance claims by partnering with an independent Central agent to design a personalized insurance plan that ensures your business’s security and peace of mind.
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