Being your own boss is a very liberating experience. It’s also a risky business without a doubt. With executive power comes great responsibility and great liability as well. All of a sudden, you are the one responsible for the quality of your services and the lives and well-being of your employees. Meanwhile, the contractor industry is always on the list of the most dangerous jobs in the U.S., with construction workers, roofers and electrical installers in the top ten. In your line of work, it pays to be prepared and have the necessary Maryland business insurance coverage that protects you, your business and your employees from a variety of liabilities.
General Liability Insurance
General liability is a type of insurance any business could benefit from. In Maryland, you are required to carry at least $50,000 in general liability insurance in order to apply for a Maryland home improvement contractor license. As the name suggest, general liability insurance protects you from a wide range of risks. You can always customize your coverage to meet your specific needs, but we recommend considering protection for the following types of claims:
- Bodily injury – covers you and your employees if they cause injury to a client, vendor or another third party.
- Property damage – covers you and your employees if they damage property that belongs to someone else.
- Contractual liability – covers you in case of a dispute over the terms of contract.
- Completed operations / product liability – covers you if your product or service leads to an issue or damage.
Workers Compensation Insurance
Workers compensation insurance protects your employees if they get injured on the job. In Maryland, all employers with one or more employee are required to carry this type of insurance. If you don’t have any employees, you might get away with not having to purchase this policy. However, keep in mind that in this internet age homeowners are fairly educated in regard to the importance of hiring licensed and insured contractors. They understand that if you don’t carry workers comp, they could be stuck paying for your medical bills if you are to trip on a dog toy and twist your ankle.
Also be careful with misclassifying your employees as independent contractors. You could get out of paying for workers comp, but you are opening the doors for lawsuits and IRS audits if your “independent contractors” do get injured on the job.
Commercial Auto Insurance
If you have a fleet of vehicles that are used by your employees to transport equipment, deliver services and goods or transport crews, you could use Maryland commercial auto insurance. It offers similar coverage to the one you have for your personal vehicle, but the limits are higher. You also get a few additional areas of protection, including your employees, equipment and business assets. You can’t be too careful when it comes to auto insurance if your business operations heavily depend on your vehicles.
Professional Liability Insurance
Professional liability insurance is also know as errors and omissions insurance. It somewhat overlaps with the completed operations insurance, but offers a broader coverage in case of a mistake you make that leads to client’s financial loss. If you provide professional advice as a contractor (which most contractors do in some form), professional liability coverage is something you should consider. When choosing a policy, check if it covers your sub-contractors as well. If it doesn’t, make sure they carry their own professional liability policies to minimize your risks.
That’s a lot of insurance policies to pay for—do you really need all of them? Depending on your specific line of work, you could get away with limited coverage in some areas. Feel free to give Freedom Insurance a call and we’ll be happy to perform risk assessment to determine the degree of coverage your Maryland contracting business needs.