Insurance: The Contractor’s Business Safety Gear

Just as workers need to wear safety gear onsite, it’s a must for contractors to have their insurance requirements and certificates ironed out.

Risk management is crucial in the home improvement industry, and proper insurances help in keeping business owners secure for payments and potential litigation costs.


There’s already enough vulnerability at play during the course of operations – bodily injuries, property damage, subcontractor negligence, equipment mishandling, theft, fire, flood, and so on.

Accidents can happen anytime. Plus, with the lengthy list of Consumer Fraud Act (CFA) regulations, technicalities can be unintentionally overlooked, which would easily put a contractor at risk for legal and financial pitfalls. A couple of botched reports, or even a simple misunderstanding can lead to the threat of a painful court trial – one that you just don’t have the time, money and energy to endure while running a tough business.


It’s important to understand how policies and insurance coverage work to safeguard your assets and control different kinds of liabilities.

All efforts to perform high quality work won’t amount to much if faced with a lawsuit that can disrupt your cash flow or even leave you in debt. By clearly defining and understanding the benefits, limits, obligations and risks that come with each type of insurance for each specific project, all parties (client, contractor, subcontractors, employees, attorney) can receive what is due to them without further dispute.

Common insurances to consider include:

  1. General Liability
  2. Professional Liability
  3. Hold Harmless Agreement (Limited, Broad, or Intermediate)
  4. Flood Insurance
  5. Performance Bond
  6. Payment Bond
  7. Bid Bond
  8. Builder’s Risk


Project developers and property owners often require specific insurances in order to be qualified for participation in bidding.

At the end of the day, getting properly insured is a necessary investment to keep your home improvement business moving, and the avoidable headaches at bay.