Contractors put a lot of time, money and effort into building up their reputation and credibility in order to grow their business. What some contractors often forget to focus on, however, is getting comprehensive insurance coverage that is designed to offer coverage tailored to their unique risks. With all of the hard work it takes for a contractor or construction business to stand out in their industry, it would be a shame to lose it all because of a disgruntled employee or an unsatisfied customer.
Insurance agents that specialize in insuring contractors should make sure their clients are not harboring some of the common misconceptions, listed below, that lead many contractors to believe they don’t need certain types of insurance.
“I’m licensed and follow all regulations. Why would I get sued?”
Even business that follow all rules and regulations to the letter find themselves defending their business against a lawsuit. Regardless of whether or not the claims against the business are frivolous, or the business is found to be not liable, the costs involved in just defending against a lawsuit can put a major financial strain on a business – not to mention consume a lot of extra time and other resources. Contractors who obtain liability Insurance policies can rely on their coverage to pay to defend their business against a lawsuit, and if necessary, pay any settlement or judgement amount that is decided upon, up to the policy limits.
“My clients have insurance coverage so I don’t need it too.”
In some cases, a contract might include insurance purchased by the client specifically for the project. However, this type of insurance coverage typically only covers the project itself and the materials being used for it, leaving the contractor vulnerable to risks like employment claims, breach of contract claims, workers’ compensation claims, loss or damage to the contractor’s own tools or equipment and more.
“I don’t have anything for someone to gain if they sue me.”
Contractors are sometimes small business owners, employing less than a handful of employees or even none at all. They may even work from home or remotely when not on a job site, not having a designated office property. Even with a bare-bones operation, there can still be a lot to lose in the event a lawsuit is brought against their business and a judgement is made against them. Judgment liens never expire and can continue be renewed until they are settled. That means equipment and personal property can be seized, bank accounts and assets can be taken, and wages can be garnished until the judgment is paid.
When it comes to obtaining insurance for a contractor or construction business, there is a lot misinformation to navigate alongside the good information. Should the unthinkable happen – an E&O lawsuit, employment practices claim, theft, fire, injury or other unforeseen disaster – not making the right insurance decisions can cripple or permanently shut down a contracting or construction business.
About American Team Managers Insurance Services
Founded in 1998 by Chris C. Michaels, American Team Managers Insurance Services (ATM) has provided wholesale and MGA services to more than 5,000 independent insurance agents throughout the United States. Our goal is to establish close, long-term relationships with our agency partners and insurance carriers and provide competitive products for the Exclusive and Non-Exclusive markets that we serve. For more information on our products and services, give us a call at (714) 414-1200 to speak to a representative.