What Kind of Insurance Should a Contractor Have?


Every job has responsibilities and risks which can affect your finances, image, or health. If you are in the contracting business, you could face considerable risk if a client files a lawsuit. 

Legal action could adversely impact your reputation and drain you of a considerable amount of finances. 

To guard against such a risk, you should get contractor insurance. Read on to learn more about types of contractor insurance, its benefits, and how you can get it.

What is Contractor’s Insurance?

No business, including the contracting industry, is free from accidents, injuries, and losses. Anyone, including former clients, can file a lawsuit against you due to loss or accident, and insurance can protect you.

In some cases, insurance covers lawsuits and medical costs. You can choose from several kinds of contractor insurance, depending on what best suits your company. 

Why Is It Important to Have Contractor Insurance?

Besides protecting yourself from financial losses, contractor insurance also has other benefits. Contractor insurance assures your client that you are a professional contractor with experience, a decent work ethic, and a good reputation. 

Primarily, the benefit of having a contractor’s insurance is to protect yourself and your business. Accidents are bound to occur, and in that case you do not want to be liable for every bill and expense. 

With contractor’s insurance, you not only cover yourself but also your business from any sort of legal or financial strain. With a contractor’s insurance that is robust, you can also cover your assets, in case of any lawsuits. It can also help cover you for any damage or repair for expensive machinery. 

Lastly, with a good contractor’s insurance policy your clients feel more confident in you as they know that in case of any accident or damage you will be able to cover the expense. This is one reason it’s considered an important investment and part of your marketing strategy as a contractor. 

9 Types of Contractor Insurance

General Liability Insurance

As the name implies, general liability insurance deals with general contractor claims. For example, a person could claim injury or property damage due to your company. This insurance will cover their medical expenses and property repair. It also helps you with the legal expenses of defending your company if there is a defamation claim. 

Professional Liability Insurance

If a client files a lawsuit against you for negligence or malpractice during the tenure of services, you may be forced to pay a heavy fine. Besides a fine, the legal expenses might affect your finances too. Professional liability insurance can protect you from such claims. This contractor insurance is best for accountants and doctors.

Workers Compensation Insurance 

This kind of contractor insurance will cover you and your employees if they get injured on the job. This compensation includes medical treatment and a specific percentage of the injured person’s salary. The exact amount of payment and duration for this insurance varies.

Errors and Omissions Insurance

This contractor insurance helps you if your client claims that the work done by you was late, not according to the terms, or undelivered. It covers your business if you or your company are accused of errors and negligence. The errors and omissions insurance covers professional negligence, a breach in the contract, services that remain undelivered, any mistakes made during the work, and missed deadlines. 

Contractor’s Pollution Liability Insurance 

Also known as environmental insurance, this insurance is important for contractors who deal with pollutants such as industrial waste disposal, sewage, and hazardous chemicals like pesticides. This contractor insurance will cover expenses if someone sues you for damage or even cleanup costs caused by accidental pollution.

Automobile Liability Insurance 

Automobile liability insurance provides financial protection for those involved in an accident or damage to property caused by a vehicle. It covers the cost of property repair and medical expenses of the other party if you are at fault. 

Builder’s Risk Insurance: 

This contractor insurance is vital if you are in the construction business. Builder’s risk insurance covers the cost of any damage to your projects like fire, natural hazards, or vandalism. It even covers tools, materials, and physical damage.

Roofers’ insurance

If you are a roofing contractor, you certainly need roofers’ insurance. This insurance covers various risks, including medical expenses for injuries caused on the job and the costs of any damaged equipment.

Inland Marine Insurance 

If you regularly transport equipment using trucks or trains, you certainly require inland marine insurance. It covers the financial cost of the cargo in case of damage during transportation or theft.

How Much Does Contractor Insurance Cost? 

If you wish to invest in contractor insurance, you will want to know the cost of it. The insurance price varies depending on the coverage provided and your particular trade. 

The size of your business, location and the number of employees will also affect the insurance cost. Additionally, before giving you a quote, the insurance companies will want to look at past claims made against your company. 


In a contracting company, accidents or false claims by frustrating clients are bound to happen. To protect your business and save finances, you should get insurance. The cost of insurance might seem like a lot, but it can be beneficial in the future. Consult an expert if you don’t have insurance or feel like more aspects should be covered.

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About the author Steve Coffey

I am passionate about the building materials industry helping companies all throughout the channel see success and exceed the expectations of their audiences

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