Understanding Insurance Policies

Posted on: 14 August 2018

Contractors need to make sure they have adequate liability coverage for all of the vehicles they use as part of their operation. Any insurance mistakes can leave contractors susceptible to thousands of dollars in damages should an accident occur. The following are five big mistakes you need to avoid as a contractor when it comes to your liability insurance.

Not taking advantage of policy add-on perks that can be beneficial

Sometimes, insurance providers will offer add-on perks like free consulting services when you have a policy with them. Be aware of and take advantage of these perks to make the most of your liability coverage.

Failing to put effort into one's relationship with the insurance broker

Your insurance broker serves an important function in explaining to you your policy details and potentially walking you through a claim if necessary. It's always a good idea to keep an open communication channel with your insurance broker and build a good relationship over time.

Being unaware of one's liability coverage needs

As a contractor, you need to be aware of what vehicles and equipment pieces you need to have insured. Don't assume that you don't need insurance for a piece of equipment when you're using it on your own property.

You should not only be aware of what vehicles you need to insure, but also how much coverage you need for vehicles. You can discuss your questions about legal requirements for contractor liability insurance coverage with your insurance broker to make sure that your coverage meets minimum legal requirements.

Not knowing what coverage one has

Having coverage features won't do anything for you if you are unaware of those features. Make sure you know the specifics about what types of damages your policy will cover and what types of damages it won't cover.

For example, you should know if your policy will cover you for damage from construction vehicle attachments. You also need to know what types of medical damages your insurance policy will cover and what your coverage limits are for medical damages.

Being overly focused on minimizing premiums

While it's true that minimizing premiums will cut your monthly operation costs, it's also true that you're going to pay a higher deductible if your premiums are low should a claim need to be filed. Remember that you can write your monthly premiums off as a business expense. However, paying a high deductible can really hurt your cash flow if an accident should happen and potentially put you out of business.