Insurance for contractors

The covers

Broadly standard, with the emphasis in different places from most small businesses.

• General liability, including products and completed operations, which responds to claims arising after a job is finished
• Workers' compensation, generally required once there are employees, and priced by classification
• Commercial auto for vehicles, plus hired and non-owned where anyone drives their own
• Tools and equipment cover, since standard property cover is written for property at a premises
• Installation or builders risk on the work in progress, which is not the same as insuring your own property
• Professional liability where you design as well as build, since a design error is a professional claim

Completed operations is the one to understand

A claim arising from finished work can arrive long after the job. Because general liability is written on an occurrence basis, the policy in force when the work was done is generally the one that responds.

That makes continuity valuable in a way it is not for many businesses: gaps in cover leave gaps in the years of work behind you, and those years keep generating claims.

It is also why completed operations cover should not be quietly dropped to reduce a premium. It is the part of the policy that covers the work you have already been paid for.

Subcontractors, and the audit

An uninsured subcontractor is usually treated as your employee at audit, and their payroll can be added to your workers' compensation premium at the end of the year.

The routine defence is collecting certificates from every subcontractor before they start and keeping them current. This is tedious and it is the single most effective thing a contractor can do about the year-end bill.

Their general liability matters too. A claim arising from a subcontractor's work can reach you, and where they have no cover it lands on your policy or on you.

Tools, materials and the work itself

Standard commercial property cover is written for property at a premises. Tools in a van, equipment at a site, and materials waiting to be installed are frequently limited or excluded.

Tools and equipment cover addresses the first two; installation or builders risk addresses the materials and the work in progress until it is handed over.

Theft from vehicles and from sites is among the most common contractor claims, and it is the one most often discovered to be under-covered.

The paperwork clients demand

Contracts routinely require you to name the client as an additional insured, to provide primary and non-contributory wording, and to grant a waiver of subrogation. Those are endorsements to the policy, not things a certificate can supply.

Read the insurance clause before signing. It is common for it to require limits or endorsements a business does not hold, and that is much easier to raise beforehand.

Keep certificates current. Work is routinely stopped and payment routinely withheld over an expired certificate, regardless of whether the cover actually lapsed.