How to Buy California Contractors General Liability Insurance
Contractors often bid on projects without general liability insurance. However, work cannot begin until you, as the contractor, have secured coverage. The contractor's general liability insurance policy provides protection from all damages and injuries that may occur while your construction projects are in process. It also covers your business's legal fees if it is wrongfully sued. In general, the five areas covered are advertisement injury, bodily injury to workers on the job, independent contractor liability, personal injury due to privacy invasion or wrongful eviction and product liability.
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Things You'll Need
- Business accounting records
- Contractor license classification
- Certificate of insurance
Instructions
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Gather basic information you are likely to need to prepare for price comparisons. You will be asked the amount of liability coverage you want (in millions of dollars), the city and county where your business is located, your contractor class, the gross income of your company, what type of contracting work you do and the size of your annual payroll, among other things.
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Search for sites online that provide competitive quotes for California general liability insurance for contractors.
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Ask each insurance company its insurance rating. From low to high, these ratings progress through B+, A-, A, A+ to A++.
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Ask a representative of each company that provides a quote whether the company is an admitted or non-admitted insurance company, noting the responses in your records. Admitted insurance companies pay into the California Insurance Guaranty Association (CIGA), which adds an additional layer of protection for the policyholder in case the insurance company defaults. If you have a default of a CIGA carrier, it pays only the first $500,000 in claims, however.
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Answer the questions asked by each potential insurance company to get quotes. Record each insurer's quote, noting each carrier's price, insurance rating and whether it is admitted on non-admitted for each possible carrier.
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Talk with other contractors to find out which insurance agents they use and how well their insurance company performs.
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Contact one or more insurance agents by phone or in person. Ask for a quote from whatever company or companies he represents. Again, ask for each company's insurance ratings and make notes. With your online quotes in hand, you know approximately how much the general liability policy should cost, allowing you to make an informed decision.
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Make a down payment with the insurance company for the liability insurance policy you choose. You typically will make nine or 10 payments later in the year, according to The Contractors Group website.
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Ask your insurance agent to provide your customer a certificate of insurance proving your insurance status as soon as possible. Typically you may not start construction until the certificate of insurance has been received. Request that a copy be faxed to you at the time it is mailed to your customer.
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Tips & Warnings
Non-admitted carriers are more likely than admitted carriers to approve contractors who are difficult to insure. Some non-admitted carriers have a higher insurance rating than some admitted carriers.
A delay in getting a certificate of insurance into your customer's hand can cause a start-up delay, potentially putting you in breach of contract before you start the project.
References
Resources
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