Why You Need a Contractor’s Liability Insurance Policy

Life is full of uncertainties. Things sometimes don’t always go as planned and if there are no plans on how to manage or tackle those unwanted occurrences, then inevitably, huge losses would be suffered by the parties involved.

For these reasons and more, there is such a thing as insurance.

What Is Insurance All About?

When mishaps and accidents that generally result in damages, be it to the body or to property, occur, the means through which recompense or indemnification is paid to the victim of such an occurrence Is what is known as insurance. The idea is to try to restore the victim of such an occurrence to the status such a person (both legal and natural persons can be in this category) was before the damage or loss was suffered.

It is basically a contract given as a policy by an insurer (this might be a company, an individual an underwriter etc.) to another for a small amount with the promise of reimbursement in the event of any loss or damage. You can read more about it here.

However, while it is advisable to be covered by one policy or the other, there are those who by virtue of their engagements, business routines and the services they render, are more prone to the occurrence of these contingencies. These contingencies leave them susceptible to many actionable claims which can lead their organizations to bankruptcy and thus incapable of rendering their services.

One group of people that such situation can affect a lot are contractors.

Contractor’s Liability Insurance

This specific policy is primarily targeted towards contractors who have people under their employ or who function on their behalf and who would be held responsible for the acts of their employees. This policy shields them from the financial liability they would have incurred from such occurrences.

It is a necessity for them because of the responsibilities that come with their line of work thus, for them, it is required that they have a contractor insurance policy for the following reasons:

  1. To Protect them From Claims: This is necessary to protect them from cases of vicarious liability which is the liability of an employer for acts or damages caused by an employee in the course of duty. This principle holds true in law because, as an employer they are responsible for the actions of all that work for them in the course of rendering services.
  2. To Protect their Employees: Accidents do happen in work environments that might result in serious injuries to employee(s) who would be rightly entitled to some recompense as a result. Again, some jobs are more accident prone than others thus making it imperative that employers get this policy for their workers. They also benefit from it.
  3. To Pay Legal Fees: This policy ensures that the legal fees are paid in the event that there is a claim against the employer in court. Without this policy, an employer will be hit hard by the legal cost of these claims in court and these costs can be crippling for a business.
  4. Boosts their Reputation in Commercial Circles: unlike in the past, one of the ways that people evaluate a smart business owner or contractor is from the insurance coverage that the business has. This improves their chances of getting contracts as it tells potential clients that their business is adequately covered and in doing business with them, theirs will be well covered as well.
  5. Relaxed Mind: The daily struggle that most contractors have to endure is already a big load on its own. To now add to it thoughts of probable law suits in court or claim(s) to settle can be quite disconcerting. But by getting this policy, an employer frees him or herself of this burden.
  6. It Is a Requirement In Some States: In some states, getting this policy is a mandatory requirement in order to carry on your business in that state or city. An example is the state of California. Sites like will provide more details regarding this.


There are smart steps that every smart contractor or business owner in this field that wants to thrive should take in order to successfully run their business. One such step is getting a contractor’s liability insurance policy

This is important because they are ultimately in the best interest of the business owner or the contractor.


Latest Issue

BDC 318 : Jul 2024