Everything You Need to Know About Contractors’ Insurance

This article, written by Rachel Porter for RealtyTimes.com, is a great introduction to Contractors’ Insurance and the need to use an expert, independent agent from Lathrop Insurance Agency to ensure your policy is written correctly.

Everything You Need To Know About Contractors Insurance Claims



If you are in the contracting business, you are going to need a robust risk management strategy. After all, you are operating a business where accidents could occur at any time, without warning.

What should be at the heart of your strategy is contractors insurance. With a contractors insurance policy, you and your business have protection from claims that could put everything you’ve worked so hard for in jeopardy.

At present, the most common contractors insurance claims have something to do with bodily injury and property damage, both of which are covered by a general liability insurance policy. Most contractors are already well-acquainted with general liability insurance as well as worker’s compensation. There are, however, a variety of other situations that could trigger a contractors insurance claim. It is in your best interest to protect your business from such claims by making sure you have the necessary coverage.

Here are facts about contractors insurance claims that you need to know.

Design and build deficiencies

Your company may have general liability insurance, but if there is something wrong with the design and build part—which you presumably did—of your project, you are going to need more than a general liability policy to cover that problem. With most general liability insurance policies specifically excluding coverage for professional services, you have to have a professional liability policy to cover any design and build issues.


Most contractors have general liability insurance, which is a good thing. However, general liability policies don’t cover theft, which is bad because tools and equipment get lost or stolen all the time at construction sites. With the costs that come with the loss of the tools and equipment, contractors will have to get builders risk insurance to protect themselves in case of theft.

Construction delays

Delays are not at all a strange occurrence in the construction industry. However, construction delays usually mean financial losses to the client. Whatever the reason for the delay, the client can file a claim for reimbursement on the financial losses it has caused. Again, general liability insurance won’t cover this. Only a professional liability policy can pay for the reimbursement the client is seeking.


It is also common for contractors to get subcontractors for certain parts of their project. Since subcontractors are usually not covered by your contractors insurance, it is in your best interest to hire only subcontractors who have contractors insurance coverage themselves. Also, as much as possible, the contractors insurance policy of your subcontractors should have approximately the same amount of coverage as the one you’re holding. You can always verify an insurance policy with your subcontractor’s insurance provider.

Step increase

In case you’re wondering why the cost of your premium rises every year, it’s because of the step increase that insurance companies have built into their system. You see, statistics show that in the first year, less or zero claims are filed against contractors insurance. The succeeding years, however, will see an increase in the claims rate. Considering how much money insurance companies are going to spend to insure a business in the subsequent years, they have come up with the step increases, which you need to fully understand to help you with your budgeting for premiums in the future.

Policy period and extended coverage

The day your contractors insurance is activated is the day the policy period begins, and that period will end upon the expiration of the policy.

In case you buy extended coverage, your coverage will continue for 60 days after your policy expires. So in case you get a contractors insurance claim during that 60-period, you can rest easy knowing that claim will be honored.

It is critical for you to understand the terms of your contractors insurance policy fully. That way, you will be completely aware of what’s covered and what’s not, allowing you to be better prepared for any construction insurance claims that may come your way.

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