Why Contractors Insurance and Bonds Are Necessary
Purchasing a bond for a contractors is a good option, as it can be more affordable than submitting a letter of credit or paying out of pocket. It is also better for contractors who work on multiple jobsites. However, before purchasing a bond, a contractor must first have a good credit history, which is a key factor for underwriting guidelines and calulating a bond premium. Read on for more information about purchasing a bond.
Cost of contractors’ insurance and bond
Contractors’ insurance and bonds are important business tools for small to mid-sized construction companies. Many contractors are unaware of these necessities. However, they may incur huge financial liabilities if they don’t get them. There are several reasons why this protection is necessary. Listed below are a few of them. To avoid getting sucked into the expensive insurance trap, be sure to read the fine print carefully. In addition to protecting the company’s assets, surety bonds also protect the public and construction contractor’s clients.
When choosing the correct amount of insurance coverage, consider the number of employees you have. The more employees you have, the more likely you are to suffer an accident. Your past track record also matters. A history of filing claims will significantly increase your insurance quote. It’s always wise to shop around for a policy that covers the most important areas of your business. You might not even need all of them. But it’s worth knowing that some insurance policies are cheaper than others.
Inland marine insurance
Inland marine insurance for contractors can fill a gap in your general liability policy. While a general liability policy covers your property at your policy’s location, it may not cover items you transport on a regular basis. By purchasing inland marine insurance for contractors, you can protect your most valuable equipment and tools and avoid the need to purchase an excess general liability policy. Moreover, inland marine insurance for contractors has a high Better Business Bureau rating.
Inland marine coverage also covers your moveable office equipment. Unlike property insurance, inland marine coverage does not end when the goods are stored in a fixed location or with a bailee. Additionally, most inland marine insurance policies cover materials held in warehouses, because warehousing is considered part of the transport process. The coverage for these items is similar to that of property insurance for contractors.
General liability insurance
Although California law does not require general liability insurance for contractors, it is highly recommended. Liability coverage protects contractors from the financial responsibilities caused by injury, property damage, or advertising injury. It also covers finished products. In addition to providing protection to clients and customers, general liability insurance also protects business equipment. Depending on the state, some municipalities also require this insurance for contractors. To protect yourself from financial liabilities, consider general liability insurance for contractors and bonding.
While there are many advantages to having general liability insurance, you should understand the differences between this type of coverage and bond coverage. The bond protects the contractor from a third-party claim when the work is not completed properly or the work is not up to standard. The bonds are typically packaged with BOPs. Purchasing these policies together can lower your premiums and protect your business against thousands of dollars in damages. You can find a plan to meet your needs in our contractor insurance comparison tool.
Payment bonds are a necessity for contractors in all states. In addition to being required by law, payment bonds are also often a requirement for federal and state construction projects. Under the Miller Act, contractors must obtain both performance and payment bonds. These bonds cover the contractor and his subcontractors from any legal liabilities, including failure to pay their suppliers and subcontractors. These bonds protect the general contractor as well as the material suppliers and laborers who work with him.
When applying for a license to perform construction work, contractors must carry workers compensation insurance. Payment bonds protect the customer by guaranteeing payment, and surety bonds protect the state and employees. When applying for a license, contractors must also carry payment bonds and insurance. Payment bonds are required in California as well. In some states, contractors must carry both insurance and payment bonds to avoid legal liabilities. As long as they carry both, the process will go smoothly.