Holding accountability for one’s actions is a part of being a member of the modern society. Humanity would have hardly been able to be exist in its current form had there not been a way for those who were wrong to in some way, shape, or form be held accountable. More importantly, people who were wronged needed some kind of compensation for what they lost, be it in terms of property or emotional trauma. Over the years, the justice system has changed and new laws and regulations entered the picture. As the world advances, so does the system that exists to protect the people. Individuals are no longer the only ones protected against certain claims as organizations like businesses can also apply for such services and protect their reputation or assets. To put it in simpler terms, insurance is widely present and most things can be covered with it.
Insurance and Contracting
Talking insurance as a whole is a too broad topic to tackle. There are simply too many different sides to it, too many areas and specializations that feel like completely different things at first despite falling under the same category. In the article here and now, we will be focusing solely on a single type of insurance that aims to aid contractors. This is called contractor liability insurance and just like its name suggests it exists to help business that deal with contractual work. But what it is actual purpose and how does it all really work? If you have a contracting firm or if you want to learn more about insurance in general, make sure to keep reading the article. What is more, if you need extra information on contractors insurance and how to get it, make sure to visit APOLLO Cover.
What Is It Really?
Contractor liability insurance, also sometimes called professional contractors liability insurance, is a type of policy that covers the construction errors of anyone involved in the contracting and building sector. CPL for short, it is used by contractors during their designing and building services for the coverage of mistakes by the contractor and their employees, as well as errors by third parties they have to hire for certain services. There is a lot that can go wrong during every project so having a good insurance policy to cover it is crucial. In addition, contractors usually cooperate with and depend on many different third party specialists, including but not limited to architects, engineers, designers, vendors, and many others. It takes a lot of skill and talent to complete a building contract, and one of the contracting businesses cannot possibly do it alone.
When Is It Used?
If something goes wrong that results in an injury on the construction site or damage to some of the property on or around the site, the insurance kicks in to cover it. Contractors are equipped with it as a failsafe, just in case something happens. It is not always necessary. As a matter of fact, it is more often not used that it is, but it still makes perfect sense to get it every time especially when there are many third parties included in a project with whom the main contracting firm has never cooperated before. Third parties are also sometimes called subcontractors, highly specialized workers with much needed skills for most projects. These include electricians, plumbers, dry walling specialists, and others. If or when some of the workers make an error or a mistake, the coverage is there to cover it and protect the contractor. Covering losses is the main benefit of this insurance policy, but saving the reputation and the good name of the company is also important.
While smaller contractors who often employ third parties make up a good chunk of customers for the insurance companies, larger contractors also benefit from them. Those who have many in-house services and skills are particularly reliant on it because their every job brings about more risks. CPL insurance is therefore also made to protect large firms who do everything on their own. In many places it is this type of contractor work that makes up the bulk of contractor liability policies. The biggest benefits of doing all of the work yourself without third parties and subcontractors is more revenue. Not sharing the work with others directly leads to more profit. However, the risk is also increased and without proper insurance to fall back on it would not always be profitable or make business sense. When a large business does all of the work themselves, the policy is there to protect them against claims and cover the costs that may arise from the problems.
What Is Covered?
This is perhaps the most important aspect of every policy: what does it cover and when? Contractor liability insurance policies cover the risks that are not generally taken care of by the general commercial liability. There are many professional exclusions form this common policy and contractors need more. Things like third party liability protection, first party indemnity, pollution liability, economic loss, and repair costs are not covered by the general liability, but contractor liability does cover them. Each policy should be reviewed with great detail. It also matters what kind of contracting work the company performs because there could be certain differences between the insurances available. The contracting firm is free to purchase any of the available liability insurances, whatever type of cover they need for the upcoming project. There are usually preset policies for specific projects, but tailoring everything is also possible.
What About Builders Risk?
Builders risk coverage is often thought to be the same thing as CPL, but it is actually not. Builders risk coverages are taken by the owners of the project, while the contractor gets the professional contractor liability policy. There is a big difference there as not every contractor is also the owner of the project. Actually, they are more often not the same organization. Therefore, both of these are important because they provide different bodies with different types of insurance. As long as all of the personnel is protected and the whole project is safe, it always makes sense to get the insurance at hand.