Contractors Insurance & License Bonds
that these plans help reduce the risk that your business will face costly lawsuits that could shutter its doors. The US Small Business Administration suggests that business owners discuss their specific risks with insurance providers to determine what type to get and how much coverage is necessary.
What Does Contractors Insurance Provide?
Contractors insurance policies range significantly in terms of what they offer. Most will have a business owner’s policy (BPO) that will provide:
- General liability insurance
- Workers' compensation insurance
- Commercial vehicle insurance
- Other insurance products you need
WHY DO I NEED LIABILITY INSURANCE?
Good liability risk management can reduce the chances that your business will be sued, but it can never eliminate the risk entirely. You or a member of your organization can make a mistake that injures someone or damages property. Your mistake could harm the reputation or interfere with the privacy of a customer, client, competitor or member of the general public. When such injuries occur, you may be legally liable to pay damages to someone who suffers a loss due to your actions or inaction.
Depending on the degree of harm and the number of people injured and/or value of property damaged, a lawsuit could bankrupt your business. Even if your organization is ultimately cleared of any wrongdoing, a determined plaintiff can keep you tied up in legal proceedings for a long time, entailing significant cost to defend yourself. Liability insurance pays the cost of your defense and protects your assets.
WHAT KIND OF LIABILITY POLICY SHOULD I GET?
For small businesses the most efficient and least expensive way to purchase liability insurance is usually as part of the Businessowners Policy (BOP) which combines property and liability insurance in one contract. Alternatively, a business may purchase a Commercial General
WHAT TYPES OF DAMAGES ARE COVERED BY THE BOP?
Your liability insurer will pay damages that you are legally obligated to pay as a result of “bodily injury,” “property damage” or “personal and advertising injury,” up to the policy limits and subject to your deductible. Punitive damages are generally not covered, although there may be some exceptions.
Bodily injury means injury, sickness, disease or death; it may include injuries that are emotional or mental, such as post traumatic stress syndrome or humiliation.
Personal and advertising injury includes libel, slander or any defamatory or disparaging material or a publication or utterance in violation of an individual’s right of privacy; infringing the privacy or copyright rights of another in your advertisement; wrongful entry or eviction, or other invasion of the right of private occupancy; and false arrest or wrongful detention.
WHO IS INSURED?
BOP liability coverage insures a sole proprietor, partners or partners named in the policy “Declarations,” but only with respect to their duties on behalf of the business. The spouses of sole proprietors or partners are also covered. If your organization has officers and directors, they are insured, as are your stockholders, but, once again, and this applies to all parties, only with respect to their duties or liabilities in connection with the business. Employees and volunteer workers are insured for acts committed within the scope of their employment in your business.
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