Do contractors need more than just general liability insurance in Nevada to get a license?
If you are working now or planning to work as a contractor in Nevada, the state licensing board will have a lot to say about the types of commercial insurance you must carry.
The insurance requirements in each state vary and as such, it’s essential to know which policies you must carry and which policies you should carry.
Nevada, like California, is pretty strict on the required insurance coverage before you can be licensed to operate within its borders.
The truth is, however, that contractors should protect themselves and their business as much as possible and focus on mitigating (reduce or eliminate) each risk that might be presented while they are on the job, traveling to the job, or bidding on a job.
Contractors Insurance Requirements in Nevada
In Nevada, the state licensing board requires most providers of construction and renovation services to obtain a license before they can begin operations in the state.
The only exception is if the contractor’s job will be valued at less than $1,000 which means you’re probably working as a handyman and not a contractor.
If you visit the website of the Nevada State Contractors Board,http://www.nvcontractorsboard.com/index.html you’ll find detailed information concerning the insurance coverage you must carry and the minimum limits of liability of the policy.
The Nevada State Licensing Board is very thorough and even offers a video explaining what is required to be licensed by the state, and they provide additional information for contractors who are military veterans:
Bond Requirements for Nevada Contractors
According to the Nevada State Contractors Board, “The Board determines the amount of the bond at the time of license approval. The bond can vary in amount from $1,000 to $500,000 based on the type of license, monetary limit, past, present, or future financial responsibility, experience, and character of the applicant.
After the approval of the license, you will receive notification of the amount of bond required before the issuance of the license. A surety bond or a cash deposit will be required for that amount.
In addition to the bond requirements listed above, swimming pool contractors may be required to obtain a consumer protection bond.”
It’s important to note that bond amounts are not negotiable and once determined if the bond is not provided in the required amount, the license application will be denied.
Your bond can be cash or a surety bond from an insurance or bonding company authorized to conduct business in Nevada. Additionally, the bonding company must be rated “A” or higher.
Workers’ Compensation Insurance for Nevada Contractors
Nevada is straightforward about workers’ compensation insurance. If you are a contractor, you must carry workers’ comp. Whether you use employees or subcontractors or a combination of both, you must carry workers’ compensation insurance.
If the subcontractors you use hold themselves out as an “independent enterprise” and carry their own workers’ compensation insurance, then you will you can exclude them from coverage.
If you use the “independent enterprise” exclusion, be prepared to show the state auditor and your insurance company auditor proof that the “independent enterprise” meets the requirements to be labeled as such.
The Nevada State Contractors Board warns that Nevada contractors on construction projects need to be very careful when it comes to subcontractors claiming “independent enterprise” status by publishing the following warning:
“Contractors on construction projects need to be particularly careful. The “independent enterprise” exception does not apply to construction projects. There are no exceptions when the work being performed requires a contractor’s license. Prime contractors must ensure subcontractors have and maintain coverage because the prime contractor is always responsible for injuries to employees of independent subcontractors on construction projects.”
General Liability Insurance requirements for Nevada Contractors
Although the Nevada State Contractors Board does not mention a requirement for contractors to carry general liability insurance, only a foolish contractor would operate their business in the state of Nevada without a general liability policy.
Although your bond will protect the customer and the state, and your workers’ compensation will protect your employees and subcontractors, your general liability policy is what will protect you and your business.
In fact, your general liability policy should be considered the foundation of your commercial insurance package because the policy will provide coverage for the following risks:
- Your company’s liability resulting from bodily injury and property damage
- Any contractual liability that is required by a third party (ie; equipment leases)
- Products completed operations
- Defense costs (your insurer pays to defend your company in the event of a claim)
If you own or run a contracting business and think that you can get by without any of the above-mentioned coverages, here is a list of the most common claims filed against contractors:
- Personal injury and property damage
- Workers’ injuries on the job
- Traffic accident claims
- Stolen tools and equipment
- Damage to a Build or Remodel in Progress
Why risk your financial and time investment in your business to a risk that you could have easily transferred to a commercial insurance company?
Protect Your Business with Contractors Insurance from Fairbanks Insurance
Although your Nevada contractors’ license requires a licensing bond and proof or workers’ compensation insurance, Nevada contractors should mitigate (reduce) their financial risk of a claim using an affordable commercial insurance portfolio from Fairbanks Insurance Brokers.
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.