Question 1

What does general liability insurance cover for contractors?

Accepted Answer

General liability insurance covers third-party bodily injury, property damage, and personal/advertising injury claims. This includes accidents at job sites, damage to client property, and completed operations claims. It typically covers legal defense costs, medical expenses, and settlements or judgments.

Question 2

How much general liability coverage do I need?

Accepted Answer

Most contractors need at least $1 million per occurrence and $2 million aggregate coverage. However, many contracts require $2 million per occurrence. Large commercial projects may require $5 million or more. We help determine the right amount based on your contracts and risk exposure.

Question 3

Does general liability cover faulty workmanship?

Accepted Answer

General liability typically excludes damage to your own work (faulty workmanship). However, it does cover resulting damage to other property. For example, if faulty plumbing causes water damage to walls, the plumbing repair isn't covered, but the wall damage is.

Question 4

Are subcontractors covered under my general liability policy?

Accepted Answer

Subcontractors are typically not automatically covered. You may need to add them as additional insureds or require them to carry their own insurance. Uninsured subcontractor claims can impact your policy, so we recommend requiring certificates of insurance from all subs.

Question 5

Is workers compensation required in New Jersey?

Accepted Answer

Yes, workers compensation is required in New Jersey if you have any employees, even just one. This includes part-time and seasonal workers. Sole proprietors and partners can elect to be covered but aren't required. Penalties for non-compliance can be severe.

Question 6

What does workers compensation insurance cover?

Accepted Answer

Workers comp covers medical expenses, lost wages (typically 70% of average weekly wage), rehabilitation costs, and death benefits for work-related injuries or illnesses. It also provides employer liability coverage protecting you from employee lawsuits related to workplace injuries.

Question 7

How are workers comp premiums calculated?

Accepted Answer

Premiums are based on payroll, job classifications (class codes), and your experience modification factor (mod rate). Construction trades have different rates based on risk level. Your mod rate reflects your claims history compared to similar businesses - good safety records lower your premiums.

Question 8

Can I exclude myself from workers compensation as an owner?

Accepted Answer

Yes, sole proprietors, partners, and LLC members can exclude themselves in New Jersey. Corporate officers can also elect exclusion. However, many general contractors require all individuals on site to be covered, so exclusion might limit your work opportunities.

Question 9

What's the difference between personal and commercial auto insurance?

Accepted Answer

Commercial auto insurance covers vehicles used for business purposes, including driving to job sites, hauling materials, and transporting workers. Personal auto policies typically exclude business use. Commercial policies offer higher liability limits and cover business-specific risks.

Question 10

Do I need commercial auto for my pickup truck?

Accepted Answer

If you use your pickup truck for any business purposes - including driving to job sites, carrying tools, or displaying business signage - you need commercial auto insurance. Personal auto policies may deny claims for accidents during business use.

Question 11

What does hired and non-owned auto coverage protect?

Accepted Answer

Hired auto covers vehicles you rent or lease for business. Non-owned auto covers employee vehicles used for your business. This is important if employees run errands or drive to job sites in their personal vehicles. It protects your business from liability.

Question 12

Are tools and equipment covered in my commercial vehicle?

Accepted Answer

Standard commercial auto policies have limited coverage for tools and equipment (usually $500-$2,500). For adequate protection, you need an inland marine policy or equipment floater. We can add this coverage to protect your valuable tools and equipment.

Question 13

How can I insure my construction tools and equipment?

Accepted Answer

Tools and equipment are covered through an inland marine policy or contractors equipment floater. This covers owned, rented, and leased equipment against theft, damage, and mysterious disappearance. Coverage applies at job sites, in transit, and in storage.

Question 14

Is there a deductible for tools and equipment claims?

Accepted Answer

Yes, typical deductibles range from $250 to $2,500 depending on your policy and preferences. Higher deductibles lower premiums. Some policies have separate deductibles for different types of losses (theft vs. damage). We help you choose the right balance.

Question 15

Are rented tools and equipment covered?

Accepted Answer

Rented equipment can be covered under your contractors equipment policy. You're typically responsible for damage to rented equipment unless you purchase the rental company's damage waiver. We recommend including rented equipment coverage to avoid unexpected costs.

Question 16

What about employee-owned tools?

Accepted Answer

Employee tools aren't automatically covered under your policy. Employees should have their own coverage. However, you can add coverage for employee tools used in your business. This can be a valuable employee benefit and protect you from liability.

Question 17

What's the difference between insurance and bonds?

Accepted Answer

Insurance protects you from losses, while bonds guarantee you'll fulfill obligations. If a bond claim is paid, you must reimburse the surety company. Bonds are three-party agreements between you (principal), the project owner (obligee), and the surety company.

Question 18

What types of bonds do contractors need?

Accepted Answer

Common bonds include: License bonds (required for contractor licensing), Bid bonds (guarantee you'll enter contract if selected), Performance bonds (guarantee project completion), Payment bonds (guarantee payment to subs/suppliers), and Maintenance bonds (guarantee work quality).

Question 19

How do I qualify for surety bonds?

Accepted Answer

Surety companies evaluate your financial strength, experience, and credit history. Key factors include: business financial statements, personal credit score, cash flow, work in progress, and completed projects. We work with sureties that understand construction businesses.

Question 20

How much do surety bonds cost?

Accepted Answer

Bond premiums typically range from 0.5% to 3% of the bond amount, depending on bond type, your credit, and financial strength. License bonds are usually flat fees ($100-$500). Performance bonds for strong contractors might be 1% of contract value.

Question 21

How do I get a certificate of insurance (COI)?

Accepted Answer

Contact us with the certificate holder's name and address, any special requirements (additional insured, waiver of subrogation), and the project details. We typically provide certificates same day. For rush requests, we can often provide them within an hour.

Question 22

What should I do if an accident happens on my job site?

Accepted Answer

First, ensure everyone's safety and call 911 if needed. Document everything with photos and witness statements. Report the incident to us immediately - delays can complicate claims. Don't admit fault or discuss coverage limits. We'll guide you through the process.

Question 23

How do insurance claims affect my premiums?

Accepted Answer

Claims history impacts premiums, but the effect varies by claim type and severity. Frequency matters more than severity - multiple small claims hurt more than one large claim. We help implement safety programs and proper claims management to minimize premium impact.

Question 24

What is additional insured status?

Accepted Answer

Additional insured status extends your liability coverage to another party (usually the property owner or general contractor) for claims arising from your work. It's commonly required in construction contracts. The coverage is typically limited to claims caused by your negligence.

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