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Contractor Insurance – GL, Tools, Work Comp?

February 21st, 2010 |

Getting the right Contractor Insurance coverage at the right price isn’t always as straight forward as it should be. If you are a contractor that has employees it can always be tricky on how to include them on your insurance policy. Do you 1099 your employees or are they all W-2 employees? Do they work for other contractors or only you? Do you need to cover them on your Workers Compensation Insurance? These questions can always be difficult to answer and too often they go unanswered until the insurance company does an audit and discovers that you drastically underpaid your insurance premium. Now I always recommend that you include all anticipated payroll whether it’s going to be W-2 or 1099 wages. The reason this is important is because the rate you pay for your Contractor General Liability Insurance is directly related to the amount of payroll you have. This payroll includes any 1099 wages if those 1099 employees do not carry their own Liability or Workers Compensation Insurance. This is where many mistakes are made when the policy is quoted. They might go with the lowest Insurance quote they get when really the payroll used could be half of the other Contractor Insurance quotes they received. So at the end of the year the auditor find those wages and adds it to the policy resulting in a large audit bill (usually due within 30 days). So make sure you accurately communicate your anticipated payroll numbers to your agent when getting your Contractor Insurance quote.

The other line of coverage that often goes overlooked is your Contractor Tools and Equipment. Your business personal property coverage usually will only be covered when it is located at your insured premise. This will cover your tools but most likely it will not extend the coverage to the job site. The most common claim I see for contractors is their tools getting stolen from the job site! So this is important to discuss with your agent. You need to add your Tools and Equipment under a coverage called Inland Marine Coverage. This coverage will usually extend the coverage for your tools anywhere in the world. Also for larger equipment (usually over $500) you can schedule the exact piece of equipment with the year, make and model so the insurance company knows exactly what it is. For all other equipment I always recommend making a list of everything with an actual cash value next to each item and give it to your insurance agent. This will help to ensure you have the right amount of coverage for your equipment.

Getting your Contractor Insurance Quote is an important process. Please make sure you give accurate payroll estimates to your agent as well as a detailed description of everything you will be doing and also don’t forget to properly insure your tools and equipment!

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Bryan Cranson is the owner of Cranson Insurance Agency specializing in business insurance quotes, workers compensation insurance quotes, health insurance quotes, disability insurance quotes and life insurance quotes in Oakland County, Washtenaw County, Kent County, Cook County and Wayne County, plus the entire states of Michigan, California, Illinois, Indiana, Ohio, Oklahoma, Missouri and New Jersey and New Mexico.