As a carpentry contractor in Lancaster PA, there is a lot to manage on a week-to-week basis, insurance should not be one of those things. Carpentry contractors are in high demand right now as more people are beginning to remodel their homes as an investment opportunity since purchasing a home has become difficult for most of the country. You should be focusing on quoting jobs and finishing projects not managing your insurance. This blog post will help you decide what insurance you need as a carpentry contractor and if your current policy is the right fit for your company.
General Liability
The first step into the insurance world for a carpenter is to obtain a general liability insurance policy. This policy is usually written with one million dollars per occurrence and two million dollars of general aggregate. This GL policy protects you from claims or lawsuits that might be faced by your business somewhere down the line
Here are a few examples of what your general liability policy would cover for your carpentry business:
- You have lumber lying outside, and somebody trips and falls over it and decides to sue you as it should not have been there. Your general liability policy will protect your business from this lawsuit.
- You are running extension cords, and someone trips and falls over them and injures themselves. Your general liability policy will kick in and help cover the medical costs for that individual.
Coverage for Contractor’s Tools & Equipment
Another type of insurance policy you want to ensure you have is coverage for your tools and equipment. Some tools can be self-insured, such as a hammer or a screwdriver, but for the more expensive tools and equipment, you will want to make sure that they are covered by your insurance policy. In doing so, if they are left someplace overnight and it is vandalized or the building burns down or something to that degree, you are covered. Your tools are a huge investment, and if something happens to them you cant afford the loss or the interruption in your business. Make sure you talk to your agent and have your tools added to your policy.
Voluntary Property Damage Coverage
If you work inside residential homes and are primarily doing some form of remodeling, you will want to ensure that your policy includes voluntary property damage coverage or VPD. This endorsement can be added to your GL policy, and it covers things that are under your care, custody, and control. This coverage is missed by a lot of agents and contractors alike throughout Lancaster PA since it is never required by GC’s, property managers, or homeowners. We HIGHLY encourage this coverage because even though you are a professional, mistakes do happen. Here are some examples where the voluntary property damage coverage would provide coverage:
- Let’s say that you are remodeling a client’s kitchen. You go to re-install the cabinets but in the process of reinstallation you drop them, and they crack the granite countertop. The countertop replacement costs $10,000. Since you were working in the kitchen, the countertops are considered in your care custody and control, which means the claim would not be covered by your GL policy but by the voluntary property damage endorsement.
- You are building a deck for a customer. While you are cutting a beam in the back yard, a piece of wood kicks out of your saw and shoots through the glass sliding door. If you don’t want to pay for the glass door replacement yourself, make sure you have the voluntary property damage coverage on your contractors business insurance policy.
Additional Insured Coverage
While reviewing contracts, you may notice that the General Contractor or Property Manager requests a copy of your insurance or a COI (Certificate of Insurance), that includes them being listed as Additional Insured. This is very different than being a Certificate Holder. When you provide a copy of your Certificate of Insurance you are simply showing the current coverage, with the current limits at that given time. When you need to add an Additional Insured, you are essentially giving access to your policy to this third party.
This is becoming more of the norm in Lancaster and Central Pennsylvania as contractors work to decrease their risk. They want to be listed as additional insured because it provides extra protection for them. Say on a jobsite, you make a mistake costing $150,000. The owner will most likely sue the contractor but also the GC. If the GC is listed as additional insured on your policy, they can use your insurance policy as a first line of defense and pay for the damages before they have to tap into their policy.
Since adding a third party as additional insured on your contractors insurance policy adds an element of risk for the insurance company, the insurance company does charge to add additional insureds. We generally recommend opting for the automatic status and unlimited additional insured status. It costs a bit more up front but will save you in the long run.
Those are the four biggest components that carpentry contractors should have for their business if you operate in Lancaster PA. As your business grows and evolves, you might consider additional policies such as a business auto policy for trucks and trailers, workers’ compensation to provide coverage for your employees on the job if they were to injure themselves, or a business umbrella policy to protect your business from larger catastrophic claims.
We work with a variety of insurance companies that specialize in carpentry contractor insurance. One of those companies is Erie Insurance. Erie Business policies provide exceptional coverage for both small and large contractors. Erie specializes in contractor insurance. We are an Independent Erie insurance agent and would be happy to help you get an Erie quote.
We love working with contractors and entrepreneurs in Lancaster and Lititz who are out there bootstrapping and getting it done! So, if you have questions about your current insurance policy and want us to look over it, feel free to reach out to us via phone or email. Our agents would be happy to give you some recommendations on your policy to ensure that you have the right coverage with the most competitive rate on the market.