All business owners face certain risks the moment they open for business. The risk of losing capital if your business fails can be a daunting topic to deal with but in most cases, the business owner has written a clear business plan to help them project their financial needs for many years to come. What should be considered just as important however is the risk of taking a huge financial hit resulting from an action being brought against the business by a customer or vendor. To financially survive a legal action, you must have commercial general liability to protect you and your business.
Things can go wrong in any business, and the best and most economical way to protect the business is with proper insurance coverage with adequate limits. Commercial General Liability (CGL) is considered the cornerstone of business insurance. This coverage is typically packaged with Commercial Property coverage, but can also be purchased as a stand-alone policy. For instance, many independent contractors that do not have a lot of equipment will purchase a stand-alone CGL. In any case, the CGL forms the cornerstone of every commercial insurance program.
A typical CGL includes several basic coverages, but can be endorsed to add additional coverage when the need exists:
- Bodily Injury Liability – provides coverage in the event of an injury to a 3rd party
- Property Damage Liability – provides coverage in the event of property damage caused to a third party
- Personal Injury Liability – this coverage pays for your liability resulting from slander, libel, and false arrest
- Premises Liability – this will pay for damages you may be liable for while renting a premise such as a warehouse, office or retail space
Since every industry presents different risks, you will want to consider additional coverages that can be added on (endorsed) to your policy to accommodate your specific needs:
- Employee benefits liability
- Additional insured
- Contractual Liability
- Products-Completed Operations
Probably the most useful part of the CGL is the coverage for defense costs. Even a frivolous action needs a response from an attorney; your insurance carrier will respond on your behalf whether the claim is frivolous or justified.
Contractors who choose to operate without General Liability risk losing everything because of a claim that may or may not have merit.
Consider, for example, a landscaping business that is hired to clear property and then plant trees, shrubs, and install some Hardscaping. While mowing the area with a typical riding mower, the mower hits some loose rocks that become missiles and strike an unsuspecting child playing nearby. That child’s parents immediately contact an attorney who proceeds to sue your company for negligence and will soon be the recipient of every asset your business holds for liquidation and payment of damages.
In an attempt to save some insurance money, you have put your business completely at risk of losing everything because of an accident that could happen to anybody. Don’t take that chance; get the coverage you need with the appropriate limits that will put a veil of protection around your business.
Fairbanks Insurance Brokers is a leading source for contractor’s insurance services.
Here is What We Recommend
General Liability: Contractors General Liability will be the foundation of protection for your business. The coverage will respond if you or your employees are found liable for bodily injury, property damage, or have a products/completed operations complaint. The coverage also covers defense costs for your business to respond to any lawsuits brought by a third party.
Workers’ Comp: Many states will require contractors to provide workers’ compensation coverage for their workers before they can begin a project. Accidents will happen at the job site that can result in an employee becoming injured and missing work. Your workers’ compensation coverage will provide financial assistance for medical expenses and lost wages.
Surety Bonds: It’s very likely that your state will require you to be licensed before you can begin operations. Most states and customers will require contractors to offer a license or surety bond before you are allowed to bid on a job or begin working.
Commercial Auto: Typically, most contractors will have light and heavy vehicles that require commercial auto insurance to make certain their vehicles can be repaired or replaced in the event of an accident, vandalism, or theft.
Tool Coverage: Also known as Inland Marine Insurance, this policy will provide for reimbursement for expenses to repair or replace tools and equipment. Your tools represent an important part of your livelihood, so we always encourage carpentry contractors to consider this valuable coverage.
For more information and a free commercial insurance quote, contact an insurance professional at Fairbanks Insurance Brokers at (949) 595-0284.