If you’re looking for suitable insurance coverage, beware of the cheapest general liability insurance for contractors! It may not always be the best coverage for you.
Industry sources report that the average cost of General Liability insurance is about $42 a month, which works out to about $500 annually. However, realistically speaking, as a contractor, you could expect to pay between $300 and $600. But these are just ballpark figures. Depending on the nature, size, location, and payroll of your business, your insurance premium rates could vary.
Good Construction Insurance isn’t always cheap
Your industry has the most influence on the amount of premium you pay. The building industry (construction and contracting) is at the top of the scale, while designers fall somewhere at the bottom. Roofers pay the most because hazards are high in this trade.
It is common for smaller business owners to see insurance as a “grudge purchase.” You could believe the high premium costs could be channelled elsewhere. As a result, you tend to shop on price alone. You look for the cheapest general liability insurance for contractors that is available, and nothing else. This comes with its own set of problems.
5 Problems with buying the cheapest contractor insurance
1. Cheap insurance may have lower liability limits:
It’s impossible to predict when and what kind of lawsuit you could face. One cannot foresee the damages that may be claimed by the plaintiffs. In such a situation, a large and unexpected suit can destroy your business. However, unfounded the claims, you would be forced to defend yourself against them. If you’ve focused on purchasing a policy that gives inadequate coverage or doesn’t cover the aspects claimed, you would be in serious trouble.
2. Cheap insurance may not address the changing nature of your business:
If you’re a small, growing company, you would hire more employees, acquire property, and explore new areas of business. If you focus too much on cheap insurance rates, you will fail to address these business needs. Lack of risk management could result in being insufficiently covered.
3. Not choosing the right insurance agent:
When you focus solely on getting the cheapest possible rates, you may be inclined to DIY the process. Today, with access to the Internet and information readily available on a search engine, contractors may feel that they can handle the process themselves without paying out a commission to the broker. As a result, you may end up with the wrong kind of coverage or inadequate coverage.
4. Cheap insurance coverage may not be suitable for your business:
Insurance companies tailor policies to suit the type of business, location, number of employees, kind of projects undertaken, and also the current size of your business. When you purchase a policy keeping the focus exclusively on cost, you could end up with insufficient or inaccurate coverage.
5. Be sure to cover all contingencies:
You need to beware of the cheapest General Liability insurance for contractors as it may not give you full coverage. Good insurance agents will explain the limits of a policy. For example, there is no coverage for Workers Compensation. Clients may file for damages in case there are errors in your work, design faults, or shoddy work. You also need coverage for damage to your own property, such as tools and equipment from theft, damage, loss, and vandalism.
Get the best advice before buying the cheapest General Liability Insurance for contractors
Before buying, it’s essential to get the advice and assistance from a trusted insurance company or agent. Call Farmer Brown Insurance on (888) 973-0016. We can help!