Whether you specialize in carpentry, electrical, roofing, plumbing, or a little bit of everything, contractors are exposed to significant and often unique hazards when providing services in home, business, and industrial settings. Contractors face risk of bodily injury and damage to their vehicles, equipment and property. Potential claims of negligent work or damage to customer property are also significant risks. It’s crucial for contractors to have adequate insurance coverage to protect their businesses, employees, and equipment.
Contractor Insurance Requirements in NJ and PA
Insurance requirements for electrical contractors vary state by state. Most states require licensed contractors to carry, at a minimum, general liability and workers’ compensation insurance.
- To register with New Jersey as a general contractor, you must have general liability insurance of at least $500,000 per occurrence. New Jersey businesses that have at least one employee and aren’t covered by a federal program must have workers’ compensation insurance or be approved for self-insurance. Learn more.
- In Pennsylvania, with your contractor registration application, you must submit insurance policy information showing at least $50,000 of personal injury liability coverage and $50,000 of property damage coverage. In Pennsylvania, all employers are legally required to carry workers’ comp coverage. Learn more.
Types of Insurance Coverages for Contractors
Your contractor business is unique, and so is your commercial insurance coverage—no two contractors have the same policy. It’s important to understand the basics of your policy coverages and limits. Policies that are often recommended for contractors include:
- Commercial general liability provides legal liability protection from losses due to bodily injury to third parties on a job site, property damage to someone else’s property, or lawsuits filed against your business. This would also cover damages in case a customer is injured at your business office.
- Errors and omissions (E&O) insurance covers damage to your completed work due to unintentional faulty work, omission, or negligence. This coverage fills the gap of what isn’t covered by commercial general liability, which does not cover the value of your work.
- Commercial property is coverage for the property and equipment owned by your business, including a leased or owned building where the business operates. This policy can also cover losses for business office furniture or other office equipment.
- Commercial auto insurance covers both physical damage and liability for automobiles, trucks, cargo vans or other vehicles used for business purposes. Policies may vary depending on how many commercial vehicles or what types of vehicles your business owns.
- Business owners policy (BOP) is a package of standard policies designed for small businesses — usually general liability, commercial property, and business interruption insurance. Some carriers provide additional coverages tailored for your specific electrical contracting business.
- Workers’ compensation covers your employees if they are injured on the job or contract a work-related illness. Workers’ compensation insurance is generally required for all electrical contractors.
- Business interruption insurance, also known as business income insurance, covers lost income should your business have to shut down due to losses such as theft, fire damage, wind damage, or if your business cannot operate due to damaged equipment or another loss or event. It also covers business expenses while the business cannot operate.
- Commercial umbrella liability is designed to give businesses extra coverage for those costs that exceed policy limits. It can be a saving grace for businesses hit with a claim that results in legal costs, medical bills, damage to others’ property, and judgments and settlements.
Getting Started with a Contractor Insurance Quote
The cost of each type of business insurance coverage depends on a variety of factors, including how you operate your business. Some factors are how many employees you have, how many vehicles your business operates, the value of the equipment owned, or the number of previous insurance claims filed against your company.
The experienced team at Garden State Central Insurance Services can work with you to uncover the unique risks your business faces and design an insurance program that properly fits your budget and coverage needs. Get in touch with us!