What is Contractor’s General Liability Insurance?

Contractor’s general liability insurance helps protect businesses from claims that arise due to the normal operations of a business. Here’s a detailed description of what all does the insurance cover and how to do file a claim. 

What does contractor’s general liability insurance cover?

General Liability Insurance provides coverage to businesses for various things, including third-party medical payments, bodily injuries, property dame, advertising injuries, and more. However, it doesn’t cover faulty workmanship or any damages to the insured’s work. The idea of the coverage it to help protect small businesses from claims that arise from the regular business operations. The coverage includes :

Bodily Injury

The insurance covers all kinds of sickness, diseases or injuries sustained by an individual, including death.

Property Damage

Physical damage to any tangible property is covered by general liability insurance. It also includes all the resulting loss of use of the concerned property and can also include claim costs if your business leads to damaging someone’s else’s property.

Medical Payments

The insurance covers expenditure incurred from accidents that happen on your premises or are caused by your operations, totally regardless of fault. For instance, if a customer slips on wet floor, the insurance will cover all the medical expenses incurred for bodily injury caused during the policy period. Typically, such coverage is limited to 5,000 dollars.

Personal and Advertising Injury

It includes injury or losses arising out of false arrest, wrongful eviction, malicious prosecution, copyright infringement, copying someone else’s idea in an advertisement, or publication of material that libels, slanders or violates an individuals’s right to privacy. Although, this one is not that common with contractor’s general liability insurance claims, the insurance would cover the claims if you are sued for slander and libel.

Why does an independent contractor need general liability insurance?

Just like any small business owner, independent contractors are also at a risk of getting held liable for damages or even sued. Here’s why general liability insurance is crucial to contractors :

It Protects Your Business and You

The liability exposures and legal obligations for an independent contractor are the same as larger companies. They can be held accountable by for causing someone bodily harm, damaging client property, or advertising injury. General liability insurance helps you business by covering all the legal fees and losses caused by a lawsuit.

It Makes You More Credible to Your Clients

Many clients find it crucial for contractors to have general liability insurance before signing a contract with them. Without insurance, the clients could be held liable for any wrongdoing or accidents that may be caused by your business operations.

Specific Industries Require it By Law

Some fields of work, such as construction, have it mandatory for independent contractors to get a general liability contractor insurance. The best for you and your clients is to get separate general liability insurance policies.

How do claims work for General Liability Contractor Insurance?

There are two types of general liability contractor’s insurance determined by the claims that cover: occurrence and claims-made.

Occurrence policies work for claims that arise during the policy period and are independent of the time of claim filing. On the other hand, claims-made policies provide coverage for claims only when the resulting claim and the occurrence happen during the policy period. Claims-made policies are usually not accepted by third parties as a form of General Liability insurance coverage. Thus, contractors are recommended to carry occurrence coverage.

The claims process starts with an accident that must happen only during the policy period. The occurrence or accident also includes repeated or continuous exposure to the same general harmful or even hazardous conditions. The incident may come when the work is getting done or long after work has been finished. The occurrence can trigger a claim against the contractor – the aggrieved party or the insured contractor can report the claim to the insurance carrier.

Typically, a claim may be reported up to 10 years after an occurrence policy period. A sunset clause limits the period of reporting, thus decreasing the time frame in which one can report a claim. It is advised to have an occurrence insurance policy with the ten year tail for claim reporting.

It’s the duty of the insurance provider to defend the insured contractor but with discretion to settle any lawsuit. In case a claim is made, it’s the responsibility of the contractor to pay the deductible. At the same time, the insurance company will provide coverage for the medical payments and balance of damages up to the policy coverage limits.


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