General Liability Insurance for Contractors

The saying, "There is no profit without risk" holds true for all businesses, whether contractual or otherwise. Contractors, during the course of their work, employ many people and work for numerous clients. Sometimes, due to an accident or because of an employee mistake, on-site disasters may occur, resulting in tremendous financial losses for the business. Businesses might find it very difficult to cope up with such losses involving their employees, customers or any other affected person at the disaster site. This is where general liability insurance for business comes handy. It covers all costs associated with an onsite accident affecting the people present there.

What Does General Liability Insurance Cover?

This insurance should be purchased by all contractors before they actually start the work for their clients. For the simple reason that this insurance covers almost all kinds of third-party claims that the business is likely to face while carrying on its day-to-day operations. General liability insurance protects contractors against all liabilities arising out of accidents, the contracts that they have signed as well as the law suits that may arise due to their contracted work.

The cost of the insurance depends upon the size of the business as well as the risks associated with it. As per the premiums, they are either paid on a monthly or yearly basis. By going in for this insurance, a contractor saves a lot of money as he no longer needs to pay for attorneys to win cases against the lawyers of the insurance company. It covers all claims pertaining to injuries, property damages, even those arising out of employees' negligence.

How Does it Work?

In case of an accident, the contractor has to call up his insurance agent and fill out a form with all the available information related to the accident, including information on the victims, their contact details, any police records, hospital records, etc. This application is then submitted by the insurance agent and a claim is made to the insurance company, vis-a-vis the losses, to the insurance company's "claims department".

Upon receiving the claims made by the contractor, the insurance company starts with its investigation. Investigation involves studying, recording and reviewing everything related to the accident by the "claim adjuster". This is done by interviewing the witnesses, even asking them to recreate the accident scene, collecting all important information, verifying the hospital and police records. On the basis of all this collected information, the claim adjuster writes a report and submits it to the "legal department" of the insurance company.

The report submitted by the claim adjuster is then reviewed by the legal department. Based on this report and the evidence, the reasons and responsibility of the accident are ascertained. The legal department also ascertains whether damages, legal fees, hospital bills, etc have to be paid for or not. The payment solely depends upon the terms and conditions listed in the business insurance agreement. If the accident is due to the contractor's fault and it is covered by the policy, he will be fully reimbursed for the losses. However, if the contractor's employee or customer or any other party is responsible, the legal department can either pay the contractor and take the one responsible for accident to court or it can deny the claim and not pay the contractor anything.

When the claim is denied, a contractor has the option to sue the insurance company through a lawsuit in order to make it pay the claimed amount. The lawsuit can be very hard on the purse of the contractor as it may take years. Sometimes, the contractor may himself be sued by a third-party. However, with general liability insurance, his legal fees is entirely covered by the insurance company and he is also provided a lawyer, thus making his life easier.

As can be seen, this insurance can be very beneficial as it protects the contractor against financial losses. Going in for such an insurance policy, thus makes a lot of business sense for contractors, whose work is much more riskier compared to other businesses.