Learn why commercial plumbing contractors must have general liability insurance.
There are many kinds of business insurance available, but one that’s particularly important for plumbing contractors to have is general liability insurance.
This type of policy covers your business against any lawsuits that may arise from accidents, injuries, or property damage caused by your work.
General liability policies also cover personal and advertising claims and will pay for defense costs if an action is brought against you or your business.
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Why is a General Liability Policy Needed for Plumbing Contractors?
When you own or operate a business, it’s important to have general liability insurance in place. A general liability insurance policy covers costs and damages related to accidents that occur on the job site, injuries caused by employees, and other accidents and mishaps, such as slips and falls.
In fact, in states that require commercial plumbing contractors to be licensed (most of them do), many of these states required proof of general liability insurance coverage along with a licensing bond and workers’ compensation insurance.
Most contracting businesses should carry a package of commercial insurance coverages to mitigate all of their risks and the general liability policy is the foundation of the commercial insurance package of coverages.
What does a Contractors General Liability Cover?
A general liability insurance policy will protect your company in the event that you are found liable for damages. No matter what the reason, a lawsuit can have a negative impact on a business, and general liability coverage is necessary to safeguard against such losses.
A general liability insurance policy is divided into three sections of important coverages. Each section addresses the most common risks that a contractor faces on the job every day.
Coverage A – Bodily Injury and Property Damage Liability
Bodily injury and property damage insurance protects against losses from the legal liability of insureds by paying for medical costs, lost income, damages to property, and legal fees.
Workers’ compensation and employment practices liability are excluded from the general liability policy and should be purchased as separate policies. In addition, pollution liability is excluded but can be purchased and added as an endorsement but with limited coverage.
Coverage B – Personal and Advertising Injury
Coverage B protects your business in the event a claim is brought against you or your company any of the following offenses:
- Using another party’s advertising idea(s)
- Infringement on another party’s copyright
- Libel (defamation by print, signs, effigies, writings, or other physical means of communication)
- Slander (libelous actions that are spoken to another person)
- Malicious prosecution
- False arrest
- Wrongful entry, invasion of privacy, or eviction
Coverage C – Medical Payments to Others
Medical payments coverage can be triggered without legal action. Medical payments coverage is provided for a variety of reasons, including injuries sustained by a non-employee in the course of an accident occurring on the insured’s premises or when exposed to the insured’s operations.
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How Much General Liability Coverage does a Plumbing Contractor Need?
The simple answer is “as much as you can afford.” Very often we hear about plumbing contractors having to file for bankruptcy because they bought a general liability policy with insufficient limits so they could save some money.
This can be a huge mistake since a million-dollar policy does not cost that much more than a $500,000 policy. In most cases, a claimant’s lawyer will always sue for the value of your business and its assets, so in most cases when damages are awarded, the business owner has to liquidate and close down.
When you consider that a commercial plumbing contractor’s foundation insurance coverage is the foundation of its risk mitigation strategy, why would the contractor purchase minimal coverage when they typically have so much exposure to risk?
Moreover, if you believe that $1 million in coverage is not enough, you can simply purchase a commercial umbrella policy that will increase your protection to 5 or even 10 million dollars in coverage.
How Much does Plumbing Contractors General Liability Cost?
A plumbing contractor’s actual cost of general liability insurance varies and is always determined by the risk each contractor presents to the company.
Although underwriting guidelines can vary by the insurance company, most companies will use some or all of the following criteria to determine your company’s general liability rates:
- The location where you operate your business
- The size of your service area
- Your company’s annual revenue
- Number of employees and subcontractors
- If your company does residential plumbing or commercial plumbing or both
- Business and technical experience and licenses in force
- Claims history
- Number of years in business
- Prior insurance coverage and lapses in coverage
Many commercial insurance companies implement a minimum premium (the lowest premium they will offer) of about $500 and then go up from there.
Where Can I Buy Affordable General Liability Insurance for Plumbers?
If you perform an internet search like “contractors insurance near me,” you’ll likely see thousands of results about contractors general liability insurance, and you’ll just pick one on the first page.
This can be a huge mistake in the making! If you want the best plumbing contractors’ general liability insurance, you need to choose an experienced and reputable insurance brokerage that specializes in contractors’ insurance.
Fairbanks Insurance Brokers is an independent insurance agency that specializes in insurance products for contractors. The insurance professionals at Fairbanks Insurance Brokers are experienced in mitigating everyday risks that all contractors face when they are going to the job, on the job, and returning from the job.
You’ve likely invested a lot of hard work and money in your business, rather than subject your business to risk every day, it makes sense to transfer that risk to a highly-rated commercial insurance company, and Fairbanks Insurance Brokers will find the best carrier to meet your needs and budget.
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.
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