General Liability for Contractors

Contractors work in a very high-risk industry. There is the risk of damaging your client’s property, causing injuries to customers, being sued for poor workmanship, and many other risks. General liability insurance for contractors covers your business against such risks. In case a lawsuit is brought against you, it is your insurance provider and not your business that will cover your legal expenses. If you lose the lawsuit, your provider also covers the damages.

How much does contractor general liability insurance cost?

Unlike industries such as IT, the construction industry is a high risk one. Thus, the cost of general liability insurance for contractors in California is relatively high. The average policy premium ranges from $380 to $1,380. The limit per claim is $1,000,000 and policy limit is $2,000,000. As these figures reveal, general insurance liability for contractors is not cheap. Being a business cost, some contractors may be tempted to limit their premium payments to keep their profits high. Others only take general liability insurance either because it is a requirement in their states or because it enhances their ability to land lucrative deals. They, therefore, go for the cheapest policies available in the market. With general liability insurance, cheap can be expensive. The cheaper the policy, the greater the number of exclusions. The exclusions can be so many that the policy becomes almost worthless.

Tips for saving

The fact that standard general liability insurance policies are not recommended does not mean that you should not make efforts to reduce the money that goes towards premium payments. After all, high premium payments eat into your profits. One way of reducing the money you spend on premiums is to pay the whole amount upfront. Typically, you will pay premiums to your provider either in monthly or yearly installments. Given the small amounts involved when paying in monthly installments, many contractors are often tempted to take this option. It is more expensive than paying premiums annually. As insurance providers offer discounts for clients who pay premiums upfront, paying in annual installments is cheaper than paying in monthly installments.

Another way of reducing your premium payments is through bundling of your insurance policies. Instead of purchasing your policies from different providers, get all of them from one provider to enjoy discounts that they offer to clients who make multiple policy purchases.

Lastly, be proactive in the management of your risks. The cleaner your claims history, the lower the premiums you pay. It is true that accidents happen even for the most careful of businesses. However, you could reduce the probability of their occurrence through a comprehensive plan for risk management. Such a program may include reducing hazards in your business premises and conducting thorough employee training. The measures help keep your claims history clean and, therefore, reduce your premiums.

General liability insurance costs are a significant business expense. However, the protection they offer is extremely important. When faced with a high-value lawsuit from a client or customer, general liability insurance may be the only thing standing between you and bankruptcy of your business.