Get the Facts About Contractors Insurance in New Jersey

Get the Facts About Contractors Insurance in New Jersey

Get the Facts About Contractors Insurance in New Jersey

Any contractor working in New Jersey should have a sufficient amount of contractors insurance. It is the best way to make sure there there is adequate coverage that will protect their business from financial disaster in the event of a lawsuit or other incident. Business owners should get the facts about contractors insurance in New Jersey to.determine the right policy for their company.

Why does a New Jersey contractor need this type of insurance?

Contractors who hold this type of insurance policy have a better chance at winning jobs over those who do not. Even if a contractor is allowed to bid on a project without contractors liability insurance, it is unlikely the bid will be won without it. Further, it makes practical sense. It is important to have sufficient insurance coverage in the event that an accident happens on the work site or if some other type of claim needs to be made. Failing to be sufficiently covered can result in financial ruin for many companies.

Types of contractors insurance

There are a few main types of contractor’s insurance including primary general liability, owners interest and lead umbrella liability. Primary general liability insurance covers services and compensation for any negligent actions by the insured party. Its purpose is to protect the policyholder from lawsuits or claims that can be financially devastating to the business. Owners interest insurance protects the policyholder against vicarious liability the owner can face during the construction process. This type of insurance will cover losses that other policies cover but cannot pay for some reason. Lead umbrella liability coverage is the first level of coverage in a multi-layer insurance program. It provides a cover over the other insurance policies that are in place, so the policyholder is protected under any and all circumstances. The cost of each type of contractors insurance is based on the type of work, income and total payroll.

Deposits are non-refundable

Contractors are required to pay a between 30-40% of the annual premium when they sign their initial contract. If a contractor decides to terminate the policy early, this deposit is typically not refundable. It is imperative that contractors fully read a contract and are sure they are ready to commit to a specific insurance agency before they agree to the terms and sign the contract.

Contractors insurance does not cover poor workmanship

Contractors insurance is great to have in place when an accident occurs on the job site or for protection from professional risk exposure. However, this insurance does not cover the costs incurred from poor workmanship. If a contractor’s crew does a less than acceptable job on a site and their work needs to be redone, a contractor is not able to make a claim to have those costs covered. Contractors need to be careful that the tradesmen they hire are knowledgeable and competent so the work done is of good quality and will not need to be redone.

Be mindful of exclusions

All insurance policies have exclusions. However, exclusions on contractor’s policies can be costly, so a contractor needs to look for them on the policy. Exclusions can be quite specific, and if a contractor is not careful, a claim can be denied if the issue is not included in the policy. Some common exclusions include designated work , independent contractor, asbestos and prior claims as well as condos, townhouses, and apartments, roofing, demolition and foundation work


Contractors should make sure any subcontractor who works for them has their own insurance. Even though there are some contractors insurance policies that will cover subcontractors, not all of them do. It is better to err on the side of caution and require all subcontractors to carry their own insurance, as it is better to have too much coverage than not enough.

Business owner policy (BOP) coverage

Some insurance companies offer BOP coverage. This type of contractor’s insurance bundles several different contractor’s insurance options into one policy. Consider some of the specialty forms of insurance that can be included in a BOP insurance policy. Workers compensation coverage provides compensation for an employee who has been injured on the job or has become ill and cannot perform their assigned duties. Commercial vehicle insurance provides coverage for vehicles that are used for business purposes. Some types of coverage this type of policy provides includes liability insurance, physical damage, uninsured or under-insured motorists insurance and rental reimbursement. Additional types of insurance that might be in a BOP policy are properly claims, general liability and business interruption insurance.

Contractors insurance provides coverage no contractor in New Jersey should be without. It offers protection against issues that can cause financial turmoil for a contractor. Having this insurance is a wise financial investment that can even give contractors an edge on winning high profile bids.

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