If you are a contractor in Texas, you understand the importance of and need for a good contractors insurance policy. Yet as essential as this coverage may be, you probably still have questions about exactly what you need when buying a policy from a contractors insurance agency.
1. Why Do I Need Contractors Insurance?
Contractors general liability insurance is a type of business insurance designed to protect a contractor's company. It provides general liability coverage that protects you in the event someone is hurt at a worksite or if some type of property damage occurs. It protects your business against tenant losses when renting a building.
It also covers legal fees, settlements, and financial obligations in the event a claim is made against you. In these and other ways, contractors insurance protects your business assets. It can also help you attract business since most customers want to work with a contractor who carries liability coverage.
2. Are Business Vehicles Covered?
Vehicles used for business purposes are not covered by either personal auto policies or contractors general liability policies. According to contractors insurance requirements, any vehicle that is owned or used by a contracting business must be covered under its own commercial auto liability policy.
You can purchase a separate commercial auto policy for work vehicles from your local contractors insurance agency.
3. Are Tools and Equipment Covered?
The tools and equipment owned by your business are crucial to its operation, which is why it is important to properly protect it. A contractors insurance policy provides liability protection, so it does not cover damage to or the theft of business equipment. A commercial auto policy will also not cover these items.
To ensure that tools and equipment are protected, you can purchase an inland marine policy from your contractors insurance agency.
4. Do I Need Workers' Compensation Insurance in Texas?
Although workers' compensation insurance is not one of the contractors insurance requirements in Texas, it is important coverage that is highly recommended in addition to a business policy. Workers' compensation provides benefits to employees in the event they are hurt while working. It also protects you from legal liability and can prevent a lawsuit by an injured employee.
If you choose not to purchase this important coverage, you must report your company’s non-covered status to the Texas Division of Workers Compensation.
5. How Much Coverage Does a Policy Provide?
The amount of liability coverage a contractors insurance policy provides depends on how much coverage you purchase. Like other types of insurance, contractors general liability coverage does have limitations. If the total damages suffered in a claim exceed its limits, your business is responsible for the remainder. Fortunately, it is easy to increase liability limitations on standard policies so your business is well protected.
Contractors insurance is essential liability coverage that every contracting business needs. Depending on the type of work done and potential risks faced, contractors insurance requirements may differ. Protect your company and business assets with the right business insurance purchased from a knowledgeable contractors insurance agency!