Blog Post

What Type of Insurance Does a Contractor Need in California?

  • By Admin
  • 22 Oct, 2018
Contractor Carrying Assets

Often, becoming a contractor means starting your own small business. How can you protect yourself from potential liability? As a small business owner, you need insurance as your first line of protection. Your insurance will protect you from accidents, work-related injuries, and mistakes. Here are some of the insurance policies you can expect to use as a general contractor.

Contractor General Liability Insurance

General liability insurance is the main type of business insurance for most small business owners and professionals. For contractors, a special type of contractor insurance is available. This insurance includes potential incidents related to contracting specifically, such as property damage employees caused. 

While any general liability insurance package can work for you, a specialized policy is often worthwhile. A contractor is not required to hold GLI to operate in California (they just need to be appropriately licensed and bonded). However, if you do not have GLI, you can find yourself  personally  responsible for any incidents that occur.

Professional Liability Insurance

Professional liability insurance is also known as errors and omissions insurance. Sometimes you may make an honest mistake on a job that could cause damage to property or even cause injury to someone else. Personal liability insurance protects you from related claims.

Like GLI, it is not required, but having professional liability insurance is highly advisable. PLI can provide funding for any legal fees due to claims and pay out in the event that you truly were liable. An example of an error or omission could be failing to educate a customer on risks of a job, leading to someone needing medical attention.

Commercial Automobile Insurance

Many contractors use their personal vehicle as their work vehicle. Others have work trucks available. Either way, a commercial auto policy is often valuable to have.

A commercial auto policy is just like a personal auto policy, but often has higher coverage limits. Consider the potential value of any equipment that you might tow or transport or the amount of damage a commercial truck could do.

Builder's Risk Insurance

Builder's risk insurance is a special type of policy that covers a building when construction or repairs happen. A building undergoes different risk factors when it is under construction. Storm damage may be more severe, vandals may visit the site, and people could steal things when the area is vacant.

Sometimes a standard insurance policy either does not cover this or will not kick in until the property is complete. Though builder's risk insurance is not a requirement of contracting, this is a good idea for any contractor who commonly works on sites long-term. For contractors who do faster jobs (such as carpet installers), builder's risk insurance is not as necessary.

Worker's Compensation Insurance

If you have employees, you need worker's compensation insurance. Worker's compensation insurance covers you in the event that an employee receives an injury during their work. That applies even if the employee gets injured due to their own actions.

If you are your own employee, then you do not need worker's compensation insurance. However, you may still want to get some type of temporary disability and long-term disability insurance, as you won't be able to work if you are injured.

Once you become a contractor, you can bundle many of the above insurance packages into a single insurance package. Of course, you will also need to have the right licenses and bonds. Becoming a general contractor is a very rewarding process, but also a complex one.

To find out more about the requirements of becoming a contractor, check out the classes at Golden State Contractors School today. Call us if you have any questions. 

By Admin 14 Jan, 2021
If you want to work as a contractor, on your own or at a larger company, you need a contractor's license. Read this blog to learn about the classifications.
By Admin 01 Dec, 2020
Though construction workers can beat risk forcontractingCOVID-19, you still have ways to do your job well and keep yourself safe. Learn more here.
By Admin 09 Sep, 2020
If you have considered a career in contracting, you may wonder what you will need to accomplish that goal. Want to learn more? Keep reading?
By Admin 21 Jul, 2020
If you worry about test anxiety for the contractor license exam, here are five steps you should take as you study to boost your success on the exam.
By Admin 07 May, 2020
After you complete contractors' school and get a professional license, if you want to start your own business, read our blog to learn how to budget.
By Admin 18 Mar, 2020
If you are thinking about starting your own contracting construction company, read our blog to learn about OSHA and the common construction risks.
By Admin 07 Jan, 2020
Contractors use bonds in many situations. Discover some common kinds of contractor bonds along with when you need to use each bond.
By Admin 06 Nov, 2019
Proper planning and preparation is the key to passing your contractor's exam so you can embark on your new career. Read this blog to learn more.
By Admin 10 Sep, 2019
For your own contractors firm to become established, you'll need to attract customers. Read this blog for some ideas to help you market your new firm.
By Admin 10 Aug, 2019
Do you plan to be a licensed contractor? How can you set up your fledgling contractor business for success? Learn about five habits to develop.
Show More
Share by: