Contractors Commercial Auto Insurance Coverage Triggers
When hiring a contractor, most companies expect to see a Certificate of Insurance showing that they carry the proper insurance. The Certificate of Insurance must also satisfy the risk management policies of the company. In some cases, companies may require higher commercial auto insurance coverage than the minimums required by law. Similarly, some companies may require indemnity agreements, which transfer responsibility for bodily harm or property damage to the contractor if the contractor causes an accident.
The Contractors commercial auto insurance indemnification plan can be a good option if you want to protect your business. You should not purchase the policy just to save money. A good policy will cover a variety of scenarios, including vehicle collisions, theft, and vandalism. If you don’t want to worry about these scenarios, consider getting a separate policy to cover your vehicles and equipment. In the event of a loss, the Contractor’s policy will be the primary one to pay.
The contract may specify that contractors must have indemnity insurance to protect their company from liability claims. It should also protect the Contractor from personal injury and advertising liability. This section of the contract is typically required for contracts and bids. The Contractor should be able to demonstrate coverage in the event of an accident or other liability. This insurance is particularly important if the Contractor is using their own vehicles to transport materials, workers, and equipment.
When choosing an insurance policy for a construction business, it is important to understand the coverage limits for contractors’ commercial auto insurance policies. The maximum amount an insurance company will pay for a single incident is known as the per occurrence limit. The general aggregate limit is the maximum coverage a company can pay out over the course of a policy year. Once that limit is reached, coverage ends. MCIT recommends that members purchase insurance with at least double the per occurrence limit. The general aggregate limit cannot be a substitute for the per occurrence limit.
For a construction business, the standard liability limit is one or two million dollars. Purchasing a contractor umbrella policy can raise that limit to five million dollars or more. It may also include an umbrella policy or an excess general liability rider. A separate coverage called hired and non-owned insurance covers auto liability for vehicles that are temporarily hired for construction work. This coverage is tier two coverage and does not apply to self-employed tradesmen.
Coverage triggers are events that must occur before your policy takes effect. For example, an occurrence policy requires that you suffer an injury or property damage during the policy period to be covered. A claims-made policy requires you to file a claim before it pays out. Which type of liability policy applies to your situation depends on your coverage triggers. Learn more about them in this article. Here are a few of the most common coverage triggers:
Contractors’ commercial auto insurance is expensive, averaging $150 per month. In addition to liability insurance, they should also have workers’ compensation and general liability insurance, which will cover expenses related to client injury or property damage. Workers’ compensation is required in almost every state for businesses with employees, and contractors’ tools and equipment insurance covers the cost of repair and replacement of professional tools and equipment. Insurers also take into account the past three years of driving history when calculating premiums.
The cost of contractors’ auto insurance varies depending on the type of coverage chosen, location, assets, and payroll. Business owners policies are often the best value for contractors, as they bundle three important types of coverage into one policy. The cost will be lower compared to purchasing each type separately. But it’s still important to consider the type of coverage you need, as well as the limits you’ll need. If you are unsure, speak to your agent about boosting your coverage with additional coverage.