Contractor Insurance

At JDA Insurance, we have the utmost respect for contractors. You build the homes that we live in, the offices that we work in and the roads that we drive on. We realize how tough, complicated and risky your business is. Our goal is to take the mystery out of those bills you put in the file labeled “insurance”. We’ll show you how to break it all down; and then how it all comes together again.

So broadly speaking, in the insurance world, we break “Contractors” down into two categories:

• General Contractors – greater than 25 percent of revenues are paid to others
• Subs / Artisan – these are electricians, plumbers, HVAC, dry wall, painting, roofing and so forth… “the Specialist”

A general contractors is likely to pay 25 to 50 percent more for insurance then the artisan contractors. Why is that? It all comes down to control. A general contractor is relying on other companies to get a lot of the work done in a given job site. Because of that there is a lessening of control; the risk of something going wrong is greater.

Typical Contractor insurances include:

• General Liability Insurance – broken down into two types of things that can go wrong
  • Operations: this is on-site while the work is being done.
  • Completed Operations: this is after the job is done and you’ve left. The work you’ve left behind has failed and someone is hurt.
  • General Liability provides “defense” covers whether or not you are negligent
• Property Coverage (optional)
  • The value of the tools and equipment that you have in your trailer, at your shop or on-site will likely dictate whether you self-insure or purchase this coverage.
• Installation Floater
  • This covers the materials that you have delivered to the site that you have not billed the client for
    • The load of wood, load of cooper, load of whatever…you still own this and may want to cover should something go wrong before or during the process of installing.
  • These policies are job specific.
• Commercial Auto insurance – whether you own your own vehicles or whether everyone is supposed to have their own
  • Many personal auto policies exclude “Business Use”, so the General Contractor and/or sub may not have any coverage.
• Workers compensation – Somewhere along the way somebody has to have coverage for all the workers on a job site
  • If the sub does not have comp, the general contractor is charged for the time that sub is on the job
  • Workers comp exemption – Officers or directors in a corporation owning 25 percent or more may file exemption with the State.
  • Workers comp can be especially complicated and expensive for contractors. So it pays to have someone working with you knows about it.
• Bonds – most common are Performance Bond and Bid Bond
  • Performance Bond is basically a credit check that says you are financially capable of completing a job that you’re bidding on.
  • Bid Bond says that this person is actually qualified to meet the requirements of this job

Finally, there are typically contracts necessary between general contractors and subcontractors that specify insurance requirements. We encourage you to have legal counsel review the contracts for your specific case. This is important to helping you control the cost of risk to your business.