two contractors using tools and working on constructing a building

General Liability Insurance for Contractors in New Jersey

Did you know that 40% of small business owners don’t have any insurance coverage at all, while 75% are underinsured?

If you are working as a general contractor, you don’t want to fall into either of these groups. You should consider what type of insurance coverage will protect you, your client and your business. One type of insurance that you should definitely arrange is general liability for contractors in New Jersey.

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What Is General Liability Insurance?

As a contractor, you will be responsible for materials, equipment and labor for a particular construction project. This includes everything, even the operating vehicles used as trucks or potentially cranes. A contractor may also hire subcontractors for a project, so a significant level of responsibility and liability is attached to this role. That’s why it’s important to make sure you have a general liability insurance plan in place.

General liability provides financial coverage for a range of issues that you could experience. This includes customer injury or damage to the property. For instance, if during a project a wall collapses falling on a building next door or a piece of equipment falls off scaffolding hitting someone below, general liability covers the cost.

It also ensures that if there is a legal claim, you are covered. This is one of the first coverages you will set up because it ensures you are prepared for a client contract or a commercial lease. This is often a requirement before a project can begin.

Will An Independent Contractor Be Held Liable For Damages?

It’s possible for a general contractor to be held liable and sued for damages. It’s not that different from running your own business. If you don’t have an insurance plan in place, then you will have to cover the cost out of your own pocket. This can be quite an expensive bill, but if you have general liability, you won’t have to worry.

This doesn’t change based on the business that you are working in. People often assume if you are pursuing insurance coverage, you are working in an industrial sector, and this isn’t the case. Doing so could expose any contractor. For instance, you could provide content for a business owner.

If that content was plagiarised, it could cause damage to the reputation of the business. They can then sue you for a loss of profits. Alternatively, you could complete a renovation on a home and this may have lead to water damage after accidentally hitting a pipe. Here, the property owner could sue you to gain compensation for the damage caused.

While these are two different scenarios, both will cost businesses money and are covered by general liability insurance.

Why Do You Need General Liability Insurance?

There are a variety of reasons you need general liability insurance as a contractor. Similar to a small business owner, you are liable for incidents and accidents that may happen and potential damages. This could lead to legal action and you probably want to avoid this as much as possible.

With general liability insurance, you can make sure it protects your business. As an independent contractor, you have the same duties and responsibilities as a larger firm. They can sue you for anything from an injury to harming someone. With general liability, you make sure you can afford to pay both the damages and the legal bills. Without it, this can leave thousands in unpaid expenses.

You should also consider whether you need general liability insurance. Certain industries including construction require contractors to have general liability insurance. Ideally, both the client and the contractor should make sure they have general liability coverage rather than simply relying on one or the other.

Your client will also likely expect you to have it, even if they have their own. If you don’t have this insurance in place, you will leave them vulnerable foo. It’s not a risk that most clients will take.

How Can Contractors Gains Coverage

You might wonder how you can gain general liability coverage as an independent contractor in New Jersey. There are actually two routes you can consider taking. The first option is to gain general liability through the client. Here, they will add you to the policy as an additional insured.

With this option, you receive coverage for the entire duration of the project and potentially longer. While it is possible for a business to add you or even multiple contractors to their policy, it makes it more expensive. It won’t always happen, but sometimes, a client will do this. Usually, it’s so they can be certain that the work you provide is fully insured.

The other option will be purchasing your own general liability insurance. You can do this by exploring multiple insurance providers. Clients will typically request proof that you have this coverage. You can request that your provider offers a certificate which you can freely show to clients. This also makes you more attractive to clients because it’s cheaper than having them put you on their own existing plan.

It’s important to note that both options do not provide the same coverage in case you or a client has to deal with the financial consequences of property damage or injury.

If you opt for insurance as an additional insured, you will not gain the same level of protection as the client or the holder of the policy. Instead, you will gain defense coverage so you can cover legal fees and potentially coverage for injury, property damage or even advertising injury.