How Can General Contractors Be Protected By Insurance?
General contractors understand there’s a lot of responsibilities involved in completing a job.
Often, there are the pressures from those employing them to get a project done quickly. Doing so can sometimes mean specific things are not as duly noted as they should be—until it’s too late. This is especially true when it comes to insurance. A lot of times, contractors don’t realize that unless they are listed as an Additional Insurer (AI) on any subcontractor’s policies, they’re actually liable for potential damages.
Many times, this detail is not realized until it’s too late and a claim is already filed. When this happens, not only can a general contractor be out thousands of dollars, it can affect who works with them in the future. Not to mention, the substantial increase in insurance premiums.
So how does a general contractor protect themselves from liability that could potentially ruin their business?
Have proper coverage in place.
General contractors are responsible for the liability of their subcontractors. Today, industry standards require $2 million plus. However, it’s more important to ensure there is coverage there rather than stressing about the limits. The important areas to look at are commercial auto insurance, liability insurance, and workman’s compensation.
In the state of California, if a subcontractor is injured on the job, the responsibility of the workman’s compensation falls to the general contractor. This is also true for auto accidents and liability damages.
Follow up with your subcontractors.
Because general contractors assume all liability responsibilities, it’s imperative to make sure every subcontractor that is hired has proper insurance in place for liability, auto, and workman’s compensation. Providing proof of insurance should be a requirement prior to working on a job site.
Become an Additional Insurer (AI).
Even if a subcontractor provides proof of insurance, a general contractor must be listed as an AI to ensure that coverage is standing should an accident occur. It’s essential that general contractors cover all their bases and guarantee every safety net is in place to protect their business, future reputation, and those working for them.
Many general contractors don’t understand the importance of these steps until it’s too late. Don’t let this be you. To find out more about your insurance options, give me a call today!
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