Understanding Texas contractor insurance should be your first step before launching a contracting business in the state. Once you become familiar with the state's approach to insurance regulation, you can then make a more informed decision on an insurance plan. Many contractors start with a standard plan and then add coverage extensions.
It's important to protect your business financially in case it gets sued by a dissatisfied client or a third party. That's why you need to prioritize getting a Texas contractor insurance plan that works for your business. Every contractor needs some type of coverage since just one lawsuit can sink a company quickly.
Analyze the legal risks in your operation, which will help you select the contractor's insurance coverage that matches your company's risks. Getting the right coverage pays the legal fees should a court battle arise. Instead of paying a half million dollars out of your own costs for attorney fees and settlements, your insurance provider pays for it.
No, you’ll need a commercial auto plan to cover vehicles. Contractors insurance generally provides liability coverage but not for regular vehicles such as cars and trucks. Keep in mind all states require commercial vehicles to carry a certain level of liability insurance. An option for lowering insurance costs for vehicles is to use a bundled plan from your insurer. This strategy bundles several different insurance policies together under one insurance company at a discount.
Contractors general liability insurance does not cover tools and equipment used for business. Certain types of insurance, such as inland marine insurance or commercial property insurance, do provide coverage for tools and equipment. Inland marine coverage pays for damage to equipment in transit from point A to point B.
If you rent or lease your place of business, find out from the property manager what the owner covers. Otherwise, a business renters insurance policy may cover it. Talk with an insurance expert to find out how to insure special expensive equipment, such as new digital technology. So even though a standard contractors liability insurance plan doesn't cover tools or equipment, there are multiple options to cover them. Usually, anything of high value can be insured.
Also read: Important factors that impact the cost of commercial property insurance
Even though most states require businesses that hire employees to carry workers’ compensation insurance, Texas does not have such a requirement for employers. Workers’ compensation coverage pays for accidents and injuries that may occur to workers on the job. Neglecting this law can lead to excessive fines and jail time in many states, but not in Texas. A business that does purchase this insurance sets a limit on the levels employees can receive.
The amount of liability coverage you buy for contractors insurance should be based on multiple factors. Some contractors need more coverage extensions than others due to the number of clients they serve. Each contractor needs to determine what their risks are for lawsuits, then set coverage limits accordingly.
If you need a customized plan for Texas contractor insurance, we can help you put it together based on your operation. Contact us here at Graystone Insurance Group for more information on getting a protective insurance plan for your contracting business.
