We’re not here to tell you that you need to buy insurance. You already know that because most states require a contractor to have insurance to maintain their license. And even if your state licensing body doesn’t require it, your customers do. Many potential customers simply won’t opt to work with you if you can’t present proof of insurance. But are you confident that you have the right insurance to protect your business and your family? Here are 4 reasons why you may not have the right coverage.
Did you know that if you run your business as an individual you are at the greatest risk for a lawsuit? If your customer is injured in any way, then they can sue for damages. As a sole proprietor, you’ll be the one bearing all financial liability. Unlike a limited liability company, where the owner and business are two separate entities, the sole proprietor and business are considered the same entity by law.
While you may have insurance, did you buy enough limits of liability? More often than not we see claims where the demand for property damage or bodily injury exceeds the limits carried. How does that happen? Just because you are required to have insurance does not mean that the limits required by your state licensing body or your customer are adequate. In the unfortunate event that the court awards a large sum of money as compensation to the plaintiff (your customer), then your home, personal assets, and/or business can be liquidated to pay the amount owed. Maybe now is a good time to find out more about whether or not you have the right insurance.
Another consideration is how you are insuring your business auto. Do you insure your work vehicle along with other personal vehicles on one personal auto policy? Or, do you use a personal vehicle for business? If you hit another vehicle, or person, with your work truck and someone is injured the injured party can not only sue your business, they can sue you personally. Will your personal auto policy have enough coverage to pay the claim? State requirements for personal auto insurance often aren’t enough to protect you in the event a work related vehicle is in an accident. And remember, any ding to your auto policy is going to cost money in terms of increased premiums on your policy. You’ve now put your family, your spouse and even your assets at risk for a liability claim if your personal auto policy’s liability limits are not adequate to cover the claim from the accident.
What about your tools and equipment? Your business owners policy likely has coverage for your property, including your tools and equipment, but the coverage may only apply to your business location. Generally, tools and equipment that are not at the location of your business require additional insurance. You may have heard the term “floater”. A tools and equipment floater covers your insured property wherever it is used. Our guess is that your hand tools, power drill, table saw, and so on are with you on just about every job.
Maybe it’s time to pull out those insurance policies and see if you have the right coverage. Lindbergh works with reputable insurance companies that know the construction world and understand your business. Give us a call today at 1-844-249-2684 and keep your biscuit.
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Whenever someone in my sphere of business needs insurance, without reservation, I recommend RLI.