Contractor's General Liability Insurance

Aparna Iyer Jan 2, 2019
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Contractor's general liability insurance is a must for every contractor, since claims regarding property damage and personal injury on account of negligence, cannot be ruled out, both during the course of work, and after the completion of the project.
The process of construction is arduous and involves arranging raw materials, hiring specialized trades persons who undertake activities like plumbing, bulldozing, masonry, and carpentry, and managing the overall work flow. The firm or party that supervises or undertakes the construction or the development of a property is known as the general contractor.
The firm may allocate the work to subcontractors who perform specialized tasks in accordance with the terms outlined in the primary contract that is worked out between the property owner and the general contractor.

General Liability Insurance for Contractors

Although contractors can bid for work despite not having general liability insurance, it is not advised to work without it. In many cases, they may not be permitted to undertake construction work without enough insurance. This is because general liability insurance covers third-party claims that a contractor is likely to face during the course of operations.
It helps to protect him from accidents, contractual liability, and law suits that may result from contracted work. Insurance can help contractors save money on attorneys, who may be employed during the course of litigation, since the insurance company has its own lawyers who are eager to win the case or work out a feasible alternative.
General liability insurance covers bodily injury and property damage  likely to occur during the course of work. There are exclusions that bar coverage for damages arising on account of faulty workmanship, if the damage occurs prior to the completion of the construction project.
General liability insurance provides coverage for claims arising on account of property damage and bodily injury after the completion of the project. The Owners and Contractors Protective (OCP), which provides coverage relating to subcontractors, is included as a part of the general liability policy.
Typically, a general contractor is not responsible for the subcontractor's mistakes. However, attorneys for subcontractors have found loopholes that allow them to sue the general contractor for negligence. Hence, before hiring subcontractors, the general contractor needs to ensure that the former has liability insurance.
General contractors, whose subcontractors have general liability coverage, will be required to pay a lower premium on their insurance policy. General liability insurance also provides coverage for claims on account of personal and advertising injury.
The cost of contractor's general liability insurance varies according to the level of risk, nature of work, the payroll expenses, the gross receipts of the company, and the amount of coverage required. The contractor is required to make a down payment for a general contractor liability insurance, and follow it up with 9 or 10 consecutive monthly payments.
Insurance companies have ratings that help customers assess the financial strength of the companies. This is important since a number of companies have ceased to operate due to inadequate financial strength, competitive forces, or changing market place dynamics.