RESIDENTIAL TRADE INSURANCE

Specialty trade contractors keep homes and yards in great condition. From design to build to maintenance, residential trades solve myriad problems, but they also face extensive risks of financial loss. Insurance tailored to your particular sector of the residential contractor industry can help protect your company from property and liability losses, keeping your business financially healthy.

Property insurance for residential tradesmen

Tools, equipment, trailers, sheds, office space and more — they are all vulnerable to windstorm, fire, vandalism, theft, and other disasters. Commercial property insurance for residential contractors, along with good security and loss prevention, is the best way to protect your financial investment in your business. It will step in with money for repairs or replacement if your buildings or their contents are damaged by a covered peril. You can extend your policy to cover mobile equipment as well as tools you take to the job site. 

Your property insurance can also be enhanced with business income protection so, if a covered disaster shutters your operations for an extended period, you can still have a flow of cash to help pay bills and make payroll while you recover.

Most of the coverage described here is available through a business owners policy (BOP), which is an off-the-shelf insurance product designed for small businesses. A BOP can be a convenient, low-cost way to bundle coverage for low-risk residential contractors. Program insurance is another, similar way to bundle coverage that is tailored specifically for your trade, meaning what’s covered for electricians would not be identical to a policy for plumbers or landscapers, for example.

For larger businesses, you may wish to do a package policy, which is where you buy various coverages that you need from the same insurance company. It’s an à la carte approach, but because you are buying from the same insurer, you minimize premiums and reduce complexities if you have a claim.

To insure against flood, you need to purchase a separate flood insurance policy, which your agent will help you find either from the federal government’s National Flood Insurance Program or through a private insurance company.

Commercial auto insurance for residential tradesmen

While your truck, van or other vehicle is property, it is not covered under property insurance. It must be protected with commercial auto insurance, which insures against damage to your vehicles as well as your liability for costs associated with an accident.

The property damage portion of a commercial auto policy can comprise two types of accidents: collision and non-collision. Collision insurance steps up to repair your vehicle if you run into an object or another vehicle. Non-collision insurance, also known as comprehensive coverage, helps pay for damage that occurs from objects, such as hail or tree limbs, that strike your vehicle as well as vandalism. It will also cover theft and flood damage. You can enhance commercial auto property damage insurance with rental coverage in case you need a substitute vehicle while yours is repaired, and you can add towing and other emergency services.

Commercial auto insurance also provides a liability component, and in most states, this is mandatory coverage. It helps pay for the costs to treat auto accident injuries to others for which you are responsible as well as expenses to repair or replace their damaged property.

If you intend to shuttle passengers anywhere, or you want to make sure you have medical care coverage for yourself if there’s an accident, opt for medical payments coverage under your commercial auto policy. It responds no matter who is at fault.

Residential contractors and subcontractors who use their personal vehicles for work or have employees run errands in their personal trucks or cars should consider adding non-owned auto coverage to their commercial auto policy. Personal auto policies often won’t insure business use, so if an accident happened, especially one that caused injuries, the driver and your business could face massive uninsured liability costs.

Be aware that there are many uninsured drivers on the road these days. If any of them were to cause an accident that injured you or damaged your vehicle, they might not have the assets to pay for treatment and repairs. In such a case, you would need uninsured motorists coverage, which can be added to your commercial auto policy. It prevents you from absorbing losses caused by others who have too little or no insurance.

Commercial auto insurance is available for single vehicles and whole fleets, even across locations if you have shops in different towns. If your work crosses state lines, tell your insurance agent so your coverage complies with all local laws. 

Commercial auto insurance is often expensive since accident-injury lawsuits have such high payouts. You can keep your premiums in check by maintaining a clean driving record, making sure all drivers of your vehicles are thoroughly vetted and legally licensed for the types of vehicles they drive, and using the same insurer for both your auto policy and another, lower-risk, coverage. Your insurance agent can advise you on how to save.

Liability insurance for residential tradesmen

There are numerous liability policies available for residential contractors — everything from basic slip-and-fall insurance to complex coverages such as pollution insurance. Here are several of the most important for residential trades businesses.

General liability insurance for residential tradesmen

A commercial general liability (CGL) insurance policy gives broad coverage for costs incurred if someone alleges your negligence or actions resulted in bodily harm or property damage. It applies to injuries sustained by visitors to your premises as well as damage you or your workers might do to a client’s property in the course of a job. For example, a worker might spill paint on an Oriental rug or cause a fire with a blowtorch. It will also help cover medical costs and legal fees (if necessary) for clients who are injured at their own homes due to your work, for instance, tripping over items you left on a stairway or getting hurt by something you drop from a height.

A CGL policy may also cover damage or injury that ensues from your work after you finish the job. This is called completed operations coverage or products/completed operations coverage. If, for example, you install a water heater and it begins leaking in a few weeks and floods a family room, your completed operations coverage would step in to cover costs to repair or replace damaged items. Know, however, that the cost of repairing or replacing the water heater would not be covered. If your CGL policy or business owners policy doesn’t include completed operations coverage, you can often add it by endorsement or purchase a stand-alone policy. These are common complaints, so seriously consider the value of this coverage and talk to your agent about time limits of coverage since damage and injury from completed operations can manifest after a policy period ends, you change insurers, or you move on to other employment.

Professional liability insurance for residential tradesmen

If you not only do requested work but also provide advice or design on a project, you could have professional liability risks that are not covered under a general liability insurance policy. For example, you may be asked to landscape a residence to eliminate water intrusion. If you design the drain, grading or plantings and water still comes in, you could face a complaint that your professional design did not meet industry standards. 

Professional liability insurance is not typically included in a BOP, but it might be included in a program insurance policy for your trade. Read your policy terms carefully to understand the difference between general and professional liability coverages. If you opt for a BOP and it doesn’t have professional liability insurance, you can usually add that as a stand-alone policy. Given the hazardous nature of some services like tree cutting, you may need to purchase your insurance from the excess and surplus (E&S) marketplace if you can’t obtain a policy through standard markets.

Environmental and pollution liability insurance for residential tradesmen

Many residential trades involve chemicals and fuels, which are significant sources of leaks, spills, and other unwanted releases of liquids, gasses and solids. Environmental liability insurance will help pay for your legal costs plus damage losses, cleanup, and possible restoration of the contaminated area. It may help with regulatory investigation costs and even crisis management or public relations expenses, so talk to your insurance agent about benefits.

Crime insurance for residential tradesmen

Since your workers will be going to and often into others’ homes, you may wish to insure against employee theft from clients. A business services bond is a type of crime insurance you can obtain to reimburse a client if any of their property is stolen by someone working for you. This protection is sometimes called a third-party fidelity bond, and you can often add third-party coverage to an employee dishonesty bond to get coverage for theft of client property. It typically requires conviction of the thief for the bond to be activated.