Contractor Insurance for Your Home Business


If you’re a contractor that operates a home business, believe it or not you carry similar risks as the largest corporations out there.  Whether it’s just you and your tools of the trade, or you’ve hired a team of employees or subcontractors to help you build someone’s dream home, you’re going to need business insurance coverage.  Unsure whether this applies to your business?   Just ask yourself the following questions.

Why Do You Need Contractor Insurance?
If you’re running a home-based business, you may be thinking it isn’t large enough to require contractor insurance.  Whether you’re a plumber, locksmith, painter or carpenter, the risks are out there, and you need protection. Your work and/or your employees’ can end up inadvertently causing injury to someone, or your materials can end up damaging existing property. Also, what happens if your employees get injured while on the job? That’s why it is so important that you protect yourself properly with coverage like general liability insurance and workers compensation insurance. Here are some issues to consider:

How Do I Know What Coverage I Need?
The first thing you’ll want to do is contact your insurance agent.  In order to determine your business risk,  your agent will need to know what your business  you are in and all the types of work you perform. Be specific and honest to ensure you get the right coverage customized for you business needs. One contractor may need a customized business owner policy (BOP) while another may need a simple commercial general liability policy (CGL). Both may or may not need a commercial auto policy and both may need workers compensation coverage. It all depends on your particular line of work.

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Can I be held liable for damage or injury?
Yes you can! Today’s society is increasingly litigious, and even small missteps can result in large lawsuits. Therefore, general liability insurance is critical for any size company. Liability insurance protects your company’s assets if it is sued for causing property damage or personal injury. You can purchase general liability insurance on its own or as part of a business owner’s policy, or BOP. BOPs bundle liability and property insurance into a single policy. Remember lawsuits can happen on the first day of the job or even years after you finished the project.

Are My Materials and Labor Protected?
With builder’s risk insurance, you are protected from the loss of materials and labor costs during the course of construction due to most circumstances outside your control – Fire, theft, vandalism, wind, and lightning. As part of your contractor insurance, this valuable protection can also cover the cost of materials stored on site that are damaged or lost.  

What Is, and Do I Need, Workers Compensation Insurance?
Every NJ employer has a legal responsibility to employees to make the workplace safe. However, accidents happen even when every reasonable safety measure has been taken. Therefore, worker’s compensation insurance (WC) is required for every employee in the state of NJ.


WC covers workers injured on the job, whether they're hurt on the workplace premises or elsewhere, or in auto accidents while on business. It also covers work-related illnesses as well as certain medical expenses, lost income and rehabilitation expenses. It also pays a death benefit to heirs of an employee who dies from a job-related injury or illness.

Be careful, WC can be a tricky. Depending on your corporate structure, even though you have no employees, you may be required to carry the coverage. That’s why it is always best to consult an insurance professional.

Do My Subcontractors Need Insurance?
Absolutely! If you face a claim related to work done by your subcontractor, you may find out too late that your contractor insurance policywon’t pay. Make sure your subcontractors are insured for both general liability and worker’s comp by routinely asking for their current certificates of insurance. Also, make sure that you’re named as an additional insured, and check that the limits of liability match or exceed yours.

Do I Need Commercial Auto Insurance?
Whether it's a single truck used just by you to get from job site to job site, or several passenger cars or trucks used by your employees, you’ll need theproper insurance coverage. If you’re like many home-based business owners, you may use only one vehicle for both business and personal use.  In that case, your insurance agent can advise you on mixed use insurance coverage because your personal auto policy may not cover your business risk. 

Don’t assume that just because you’re a trusted professional to some, that others won’t have problems with your work.  If a client finds your work unacceptable or finds you haven’t met their standards, business insurance coverage will be there to protect you.  New Jersey’s insurance company John Hawk Agency can help you decide what you need when it comes to contractor insurance.  From general liability insurance to commercial auto insurance, you’ll get a cost-effective plan to help you do business with confidence.

 The Guest Column is our readers' opportunity to write about a given issue or topic in an in-depth and educational manner.

The opinions expressed herein are the writer's alone, and do not reflect the opinions of or anyone who works for is not responsible for the accuracy of any of the information supplied by the writer.

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