Why Subcontractors Need Separate Contractors Insurance

As a business owner, it is essential that you protect your assets. It is also important to protect your company's financial integrity with liability insurance. Many times, subcontractors work under larger companies. It is quite easy to simply assume that the bigger company is the only one at risk should something go wrong. However, that would be a mistake. Subcontractors need their own insurance to protect their individual business.

What Coverage Do You Need?

Subcontractors often work under larger companies, but not as employees. As a result, any lawsuits or claims filed against the work you perform are held to your specific business. For this reason, you should have separate business insurance to protect from all of your risks. Those risks may include:

Asset Protection: Subcontractors need to have property insurance to protect assets. This may include your tools, equipment, computer systems and any other assets you own. If you operate out of your own building, you need property insurance for that as well.

General Liability: General liability insurance helps to pay for instances of negligence filed against you. Claims and lawsuits, even if you are found not to be negligent, can be very expensive. These policies reduce the risk by paying for these costs.

Professional Liability Insurance: In some cases, it pays to add more liability insurance. Professional liability extends your coverage significantly. In businesses such as the construction industry, it can be helpful to take on a larger amount of liability protection to minimize risks associated with larger scale loss and claims.

In addition to this type of business insurance, consider the value of adding surety bonds to your subcontracting business. This can help to give you ample ability to showcase contractors that you are capable of completing the job properly.

In most cases, contractors that work with subcontractors are less likely to work with an organization that does not carry its own coverage. For this reason alone, it pays to obtain proper coverage for your assets, as well as for employees (such as workers compensation plans) and for other risks you face. Should a lawsuit or claim occur, you know your business remains protected from the financial loss.