As the population of Texas has continued to grow over the last few years, the availability of work for contractors has steadily grown as well. It has presented a major opportunity for the hustlers and workers who are great at their craft. Whether you have a gift for painting or are excellent at keeping bugs away, the opportunity to get jobs has grown with each new transplant to this state.
Jorge is an expert locksmith who owns a Waco business and has worked on a lot of remodel projects as a subcontractor while the fixer upper economy has boomed. Despite the fact that Jorge has been working as a locksmith since he was 18, he had an accident occur at one of his jobs recently. While he was installing new locks on the exterior doors of a flip for a friend of his, he accidentally did substantial damage to the door frame where he was working.
The good news for Jorge is that he had secured General Liability Insurance via Insurance For Texans. Many of his fellow locksmiths only carry commercial auto insurance for their trucks. But Jorge realized that even though it wasn’t necessary since his jobs didn’t explicitly require it, having a general liability policy was a way for him to protect both his reputation and his future business. This incident reinforced the potential financial and legal consequences of being uninsured. It highlighted the variety of risks contractors face while working and why having the right types of coverage is important. So what made Jorge decide to buy this additional coverage?
Definition & Importance of General Liability Coverage
General liability is an essential liability coverage for Texas contractors. It provides a safety net against third-party claims of injury or property damage. These claims can come from either bodily injury or property damage to people, places, or things that are not part of your business. If your damage is extensive enough, a third-party lawsuit could bankrupt your future. Given that most contractors in the State of Texas do not require a license, many choose not to carry this type of insurance unless required by a work site. Having this relatively affordable coverage ensures that your businesses can operate without the constant fear of potentially crippling legal challenges and financial losses.
If you are working a job, whether it is big or small, you always run the risk of a potential lawsuit if you create accidental property damage. It not only helps in managing the expenses associated with repair, but also secures the contractor’s financial stability and reputation in the long run making sure that defense costs are covered and any judgements are handled. Every contractor benefits from this coverage, particularly those involved in high-risk trades like electrical, plumbing, or construction.
Understanding General Liability Insurance
We've established that General Liability Insurance will cover risks such as bodily injury, property damage, copyright infringement, reputational harm, and advertising injury. For contractor insurance coverage, the focus is placed directly on the property damage and bodily injury. Your general liability insurance coverage will address the common claims that contractors face. While it does provide coverage for claims of bodily injury of people who are not employed by your business in some capacity, it's important to realize that it does not cover you or your employees. That requires workers compensation insurance rather than general liability.
For contractors, this insurance offers several benefits. While you are working on or bidding for construction projects it provides protection against lawsuits, enhances credibility, and offers peace of mind. With appropriate policy limits in place similar to what Jorge had for locksmith business, it becomes easier to bid on jobs and work knowing that any liability claims that might arise will be covered by the insurance company rather than your bank account.
General Liability Coverage Types
In Texas, contractors can choose from various types of business insurance coverages. These can include professional liability insurance to protect your work, inland marine insurance to protect tools, and commercial auto policies. Each of these coverage types are tailored to address specific risks associated with small business operations specifically targeted at the work that you do. It's important for contractors to understand what each coverage entails to ensure they are adequately protected against potential risks and liabilities inherent in their specific field of work. The three main areas that General Liability addresses for contractors are listed below.
Protection Against Bodily Injury Claims
General liability insurance plays a critical role in protecting against bodily injury claims that are brought by people not associated or affiliated with your construction business. This coverage is essential for contractors as it mitigates the financial impact of accidents that may occur on the job site causing a bystander to become injured. It benefits you by ensuring the contractor is not held personally liable for these incidents. It covers medical expenses and legal fees, which are vital in maintaining the business’s operations during such events.
Protection Against Property Damage Claims
This type of insurance covers potential liabilities that could arise from damage caused during construction activities. Given that damaging the location where you are working is the most likely potential claim, this physical damage coverage is the most important piece of this insurance policy. While it only protects you for accidental damage, mistakes can be expensive and hard to fund. For contractors, understanding how this coverage works is crucial as it protects against claims that could otherwise severely impact their financial stability.
Legal Defense Coverage
Legal Defense Coverage is a key component of general liability insurance for contractors. It offers significant benefits by covering legal expenses and providing relief during stressful legal claims. This coverage is essential in protecting contractors from the high costs and reputational damage that can result from legal disputes. Why would you want to pay these out of pocket when a small premium cost shifts the burden to the insurance company? Our friend Jorge understood this part.
Legal Requirements for Contractors in Texas
While most contractors in Texas are not required to carry a contractors insurance policy, some trades do have requirements since they are licensed by the state. Specific trades such as HVAC, plumbers, and electricians must have general liability with $1,000,000 coverage limits to be licensed. But remember, many job sites and general contractors demand proof of insurance before allowing your work to commence. Complying with these requirements not only fulfills legal obligations, but carrying a general liability insurance policy can also give contractors a competitive edge in the marketplace since you can immediately produce a certificate of insurance.
Securing Coverage With Insurance For Texans
Insurance For Texans specializes in helping contractors like Jorge protect themselves and their futures with customized insurance plans. Working with an experienced commercial insurance agent ensures that contractors receive the necessary coverage that matches the scope of their work, providing an essential safeguard for their businesses. That customized commercial insurance plan is provided through True Texas Commercial Insurance.
Click the button below to understand why skipping on General Liability might cost you more than you think.