Classification and getting started
The two things that decide whether a claim is paid are the classification code your policy carries and whether you were honest about the work you do. Both are settled when the policy is written, not when the claim arrives.
Every contractor policy carries classification codes describing the work you do. Those codes set the rate and, more importantly, they define what the policy was written to cover. A roofer classified as a general contractor is paying too little, and the insurer has a straightforward argument for declining a claim when the work does not match the class.
Understating the classification is not a saving, it is an uninsured period. And it is the single most common reason contractor claims get disputed, ahead of exclusions and ahead of late reporting. Declare everything you do, including the minor lines you only occasionally take on, because occasional work is still covered work.
Whatever else you buy, three things are settled before you make any judgement calls. What your state requires for a licence. What your contracts require if you are working for others. And what your own balance sheet could not absorb if it went wrong. Those three give you the floor, and most contractors find the floor is four coverages rather than eight.
Everything above the floor is a judgement about probability and cost. An umbrella is cheap protection against a large claim. Tools coverage is cheap protection against a common one. Professional liability only matters if you design. Deciding in that order avoids both the uninsured gap and the policy loaded with coverages you cannot use.
Eight coverages cover almost everything a construction business faces. They do different jobs, and buying one does not cover the others.
Third party injury and property damage caused by your operations.
Medical care and lost wages for your own injured employees.
Vehicles used in the business, including owned, hired and non owned.
Your tools and equipment against theft, damage and loss.
The project under construction, plus materials on site.
A guarantee of performance or payment, not a transfer of risk.
Extra limits above your underlying policies once those are used up.
Claims from design work and advice, which general liability excludes.
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Tell us your trade, payroll and the states you work in. A licensed specialist will come back with real numbers.
