General liability insurance for contractors is an essential safeguard for your clients before they begin work. Your clients who operate contracting companies must be ready to handle many potential claims, so their insurance coverage elections should play an integral role in their risk management strategies. Here are some critical considerations about why liability insurance is vital for contractors and the individuals and companies they serve.
General Liability Insurance for Contractors Is Important To Their Customers
When individuals and companies decide which contractor to hire, general liability insurance is one of their most important criteria. Why consider general liability insurance for your contractor? Sufficient general liability insurance demonstrates professionalism, resourcefulness, and sound business management. If contractors do not have coverage, a potential customer may be understandably concerned that working with them would be too risky.
When real estate developers or businesses are planning big projects and release a request for proposals to get bids from contracting companies, liability insurance is often an essential requirement. Many businesses would only consider working with a contracting company that has coverage.
Many businesses’ internal policies stipulate that all service providers they hire must provide proof of coverage. In addition, businesses’ own commercial insurance providers may recommend or require it.
Liability Insurance Helps Contractors Keep Their Businesses in Good Standing
The State of California does not require general liability insurance for contractors as a precondition to licensing. Nevertheless, having coverage could ensure contractors’ licenses and professional reputations are safe. It could also give your clients an extra provision when working on a project.
Suppose something goes wrong throughout a project, and a contractor needs more resources to provide clients with a meaningful remedy. In that case, it is foreseeable that clients may issue a complaint with the Contractors State License Board. Complaints can impede license renewals. In some circumstances, complaints could prompt the board to revoke a license. Active complaints are also likely to be a red flag to potential customers.
General Liability Insurance for Contractors Protects Their Assets and Operations
When contractors work on projects with either a small or large scope, any mishaps could result in a severe liability scenario. Altering the condition or property in any way is likely to create unsafe conditions while work is underway.
A claim involving an injury or damage to a client’s property might easily exceed the value of a project or even the value of all of a contracting business’ assets. Even when a claimant’s cause of action is meritless, the cost contractors incur in defending themselves can be substantial. Furthermore, a significant amount of a contracting company’s capital has to go towards legal expenses or judgments. In that case, it may become impossible to afford its basic overhead and meet its ongoing obligations.
Liability coverage enables contracting companies to provide their customers with a meaningful remedy after an incident involving bodily injury or property damage. Having the right level of general liability insurance coverage makes your clients more resilient against significant financial hardship when working on a job.
About Commodore
Commodore Insurance Services, Inc. (Commodore) is a California corporation that operates as a Managing General Agency and Program Manager. Since incorporating in 1990, Commodore has developed an expertise in the production and underwriting of insurance products for businesses across the West Coast. Our focus is on providing top-level insurance products to our clients while striving to make it easy to do business for our brokers. Try us and find out why we have continued to be successful for more than 27 years and are recognized as the trusted leader in small business insurance.
