Contractors Insurance: Some Things Covered, Some Things Not

Contractors Insurance

Contractors Insurance

We see the work vans and trucks that advertise “licensed, Insured, Bonded”.  What does that really mean?  Licensed, means the contractor has properly qualified for, and purchased the operating licenses from the state in which they operate.  Bonded, can mean different things because there are many different kinds of bonds.  In most cases, if the contractor has to “pull a permit” for the particular job, the contractor may also have to purchase insurance and a bond.  That type of bond is a license/permit bond.  It is usually required by a city or county for specific types of work, such as plumbing, electrical, heating and air etc.  The bond simply stated will “ensure” that if upon inspection of the contractors work it does NOT meet code, the bond will pay another contractor to bring it up to code (up to the limit of the bond).

Insuredmeans that the contractor has purchased what is commonly referred to as a commercial general liability policy.  The basics of this policy is to protect the contractor for mistakes they make that cause bodily injury or property damage to someone or something else. 

What It Covers:

Injuries to others (not workers for the contractor or the contractor himself) caused by the contractors or workers of the contractor’s negligence.   Or damage to property of others (not owned by the contractor or a worker for the contractor) caused by the negligence of the contractor or the workers.  Some examples include:

A paint can falls from the painters ladder onto a passerby, injuring that person.

A spark from the acetylene torch the contractor is using catches the kitchen on fire.

A homeowner is walking across the new deck installed by the contractor and a loose board drops and the homeowner falls breaking his leg.


What It Doesn’t Cover:

The insurance does not cover the contractors “work”.  Nor will it cover injuries to the contractor him/herself, or any of the workers weather or not they are paid by”1099″ or “W2”.  It does not cover the customer not paying for, or not liking the work.  Some examples are:

The homeowner doesn’t “like” the new deck installed because it is the wrong color.

The contractor falls off the ladder breaking his own leg.

The contractor breaks his brand new saw trying to cut a board on the job.

The homeowner won’t pay the contractor for the completed job.

The contractor uses the wrong glue to seal down the new linolium floor and it ruins the new linolium.

The contractor doesn’t put the fence posts in concrete and the fence falls over.


The preceding examples provided are “what if” scenarios and should not be taken for guaranteed claim payment.  All  claims have their own set of unique circumstances, and each claim is reviewed based on the facts, and coverages determined at the time of loss.  In most cases, injuries to the contractor and their workers would be addresses by “workers compensation”.

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