Builders insurance is something many small business owners and contractors worry about. Do you really need it? Perhaps you’re asking yourself that question lately. Lets look at the facts.
Let’s say you’re a building contractor. A really good contractor. You build and remodel homes. You’ve got an awesome set of tools and you know how to use them.
In fact, you’re getting lots and lots of jobs. as more and more clients who love your work refer you to their friends, family and co-workers. You’re so busy you can barely keep up with the demand. And you’re making lots of money, so why waste your hard earned money on insurance?
Well, consider this scenario:
You decide to tackle a new job at a really nice house in the suburbs. You’ll be redoing the attic for your sister in-law’s boss. He’s a decent enough guy and makes the big bucks, so money is no object. You give him a quote and he agrees it’s a fair enough price and so you get to work. You figure it’s about a 3 week job with insulation, flooring, adding a new window, some drywall work and a new carpet.
The job starts off great the first day as you get all your supplies delivered and prep work done. The first thing you decide to tackle is the window in so you can get some fresh air up there. After all, attics are about 130 degrees on a summer day and you can’t work in that environment.
As you finish the cut for the window you figure you’ll let everything drop down to the area below. You’ve double and triple checked the area and there’s nothing below to worry about. Nobody is home so nobody is going to come walking into the area. Then the impossible happens. Your sister in law’s boss speeds up the driveway in his new Mercedes just as the cut is complete. And yes, he stops directly under your new window.
Down falls 50 lbs of wood and siding, right onto the poor guys brand new ride. A noise you’ll never forget.
No worries, he’s a good guy and understands. So he calls his insurance company and explains the situation and all the details of the accident. They tell him it is the contractor’s insurance policy that would cover the damages. Yes, you as the contractor are liable! He asks you if you have contractors liability insurance and you hesitate and say, well, “I only do this part time for friends and family, so I don’t have insurance.”
Now he’s getting a little red in the face. But not as red as you. Especially the next day when he hands you the repair quote: $8,235.43.
That’s more than you were going to make on this entire job. Now you’re stuck doing everything for free and even paying for most of the material out of your own pocket.
Actually, it could have been worse. Someone could have been injured and suing you for a million bucks. You got off light with a bill for eight grand.
But things could have also been much better. If only you’d had contractors insurance, all this could have been avoided.
Many new contractors never even give contractors insurance serious consideration until something like this happens. Have you given enough thought to insurance? When your “oops moment” happens, will you be covered?
So what’s the moral of this story? Simple…
Contractors insurance is not a luxury, it is a requirement. In fact, many states have laws that require contractors to have insurance or to be bonded. Don’t wait until its too late to find out the hard way just how important liability insurance is. With lots of insurance companies offering general liability policies to contractors at discount rates online, you simply can’t afford NOT to have it.