The construction industry is one of the sectors with a plethora of uncertainties and risks. One of the significant risks is damage to third-party property or persons, which could result in a lawsuit. That’s why every contractor needs General Liability Insurance (GLI) – it’s simply a necessity more than an option.
In this article, we are going to delve into why contractors need general liability insurance and how it could benefit them.
Understanding General Liability Insurance
General Liability Insurance, commonly known as Commercial General Business Liability, protects a company’s assets and covers obligations if there’re any property damage or physical injury caused due to your services or operations on your premises. It even covers advertising and liability claims.
Why Contractors Need General Liability Insurance
Legal Requirement
Most states legally mandate businesses, including contractors, to have general liability insurance as a prerequisite to work. Failing to comply may lead to penalties — or, in some cases, revoking of licenses. Not to mention, many clients and project owners may not work with contractors who don’t have a GLI.
Protection Against Financial Loss
In the field of construction, no one can predict when accidents can happen. Whether it’s minor property damage or a significant accident causing physical harm, if you are found liable, the cost of damages and the legal fees can throw a wrench in your finances. General Liability Insurance covers these costs and protects your business from devastating financial loss by shifting the monetary burden to the insurance company.
Gaining Client’s Trust
Trust is a potent weapon in the world of business. When clients know that are working with a contractor who has a liability insurance policy, they have peace of mind knowing that they have protection if anything goes wrong. It shows that you value their property and well-being, contributing to building an excellent reputation.
Covers Advertising Injuries
As you market your construction business, you might unintentionally infringe on another company’s copyright or run a defaming advertisement. Lawsuits related to these scenarios are referred to as advertising injury. With GLI, these damaging claims are covered.
Employee Injuries
While general liability insurance doesn’t cover your employees’ injuries, it covers those of third-party persons injured on your premises or as a result of your operations. For example, if a visitor trips over a wire left out by one of your crew, your GLI would cover the medical bills and any potential lawsuit.
Legal Defense Coverage costs.
If a claim results in a lawsuit, general liability insurance will cover the legal defense fees, including attorney’s fees, court costs, settlements, and any monetary damages that you’re found accountable for.
Understand The Coverage
While GLI covers many things, it has some exclusions too. It doesn’t cover your property or tools if they are damaged or stolen. It also doesn’t cover professional errors or faulty workmanship. Purchasing additional coverages like professional liability, workers’ compensation, or commercial property insurance can cover these gaps.
In Closing
As a contractor, your work is vital, but it also brings exposure to various liability risks. Having General Liability Insurance is not just about following the law; it’s about safeguarding your business from damaging financial consequences. It’s an essential business tool that offers a safety net, enabling you to carry on with your projects knowing you’re protected if something unexpected happens. Remember, it’s always wise to have insurance before you need it than to realize its importance after an incident occurs.
Remember to evaluate the insurer and select a policy that suits your business needs best. A comprehensive insurance plan will provide a solid foundation for your business, ensuring your peace of mind as you deliver your services.
Peace of mind, legal obligation, financial protection, winning clients trust — those are some of the compelling reasons for contractors to invest in general liability insurance. It shows professionalism, helps you stand out in the industry, and most importantly, keeps your business afloat in potential legal turmoil. So, if you are a contractor and you haven’t considered GLI yet, understand that it is not a cost but an investment towards your peace of mind and financial stability.