So, you’re looking for some help insuring your Independent Contractor business?
That’s probably a good idea, because you never know what can happen on a job site.
If you don’t have enough of the right coverage when something goes wrong, your business could be over before it gets started.
Of course, a lot is going to depend on the type of contracting business you own, the services you offer, and how much stuff and people you need covered.
Don’t worry about that for now, we’ll get into that a little later, first let’s start with the basics.
No matter your business, services, number of employees, time zone, and/or hours of operation; no matter how big or how small your business is, the following coverages are essential when considering protecting your business:
This coverage protects against liability claims for bodily injury and property damage arising out of premises, operations, products, and completed operations. Coverage also extends to advertising and personal injury.
This covers an auto accident caused by you and/or employee(s). This coverage provides coverage for the bodily injury (covers those injured due to the accident) and property damage you cause to someone else’s property due to your negligence while operating a covered auto.
Protects your commercial/business property against damage caused by things like hail storms, tornadoes, and fires.
All of these coverages are best when applied “per occurrence” (coverage up to the coverage limit for each covered loss during the policy period”.
What About Workers Compensation Insurance?
In Iowa, if you are a business owner with employees, you are required to purchase worker’s compensation insurance.
This coverage provides medical and/or lost time coverage for employees that are injured while in the course and scope of employment.
It’s usually recommended to consider at least a million-dollars minimum for each coverage mentioned above. Depending on the size of your business, you may need to consider higher limits if things get out of hand.
What Is Builders Risk Coverage and Do You Need It?
For some, Builder’s Risk coverage should be considered and may be required. It provides coverage for facility improvement, renovation, and construction projects.
At the end of the day all these different types of coverage help cover your business not just for damages associated with your covered loss; it also protects you from the expenses associated with out-of-court settlements, court/litigation costs, and judgements awarded by the courts.
In Iowa, the coverages listed above, are the minimum requirements for operating your business and will require verification by way of your policy’s declarations page and/or a Certificate of Insurance.
What’s a Declaration’s Page?
A declarations page is the front page of your insurance policy. It specifies the named insured, address, policy period, location of premises, policy limits, and other key information such as year, make, and model of vehicles covered under that policy.
What’s a Certificate of Insurance?
When hired for work, most client’s will request a Certificate of Insurance to verify your coverage. A certificate of insurance is a document issued by an insurance company/licensed broker/licensed agent.
It is used to verify the existence of insurance coverage. More specifically, the document lists the effective date of the policy, the type of insurance coverage purchased (auto, work comp, general liability), and the types and dollar amount of applicable liability ($1 million general liability, $500,000 auto, $2 million umbrella).
A certificate of insurance is often needed in situations where liability and large losses are a concern.
A Detailed Liability Claim Example
Let’s say you’re a General Contractor hired to install tile in the bathroom. On day 2 of the job, you notice a leak. In an attempt to find where it’s coming from, you accidentally create a faster leak. Oh no! What now?
A plumber can definitely help! But, your coverage doesn’t extend to your plumber so you’ll need to make sure that your plumber is properly insured.
You can do that by requesting a certificate of insurance and/or their declarations page.
Most policies will not extend to other independent general contractors even if you hire them for a job. Because that contractor is not your employee, he/she will need to have their own policy with the required coverage.
Here’s an example of what an Independent Plumber should have for minimum coverages:
● General Liability $1M, including bodily injury and property damage.
● Auto Liability $1M.
● Surety Bond $10K.
● Workers Compensation and Employer’s Liability (if he/she has employees).
Which insurance company is the best for Contractors in Iowa?
That’s a great question and the one you’ve been waiting for an answer for. Now that you have a basic understanding of what is involved in finding “good” coverage let’s take a look at the specific companies you’ll want to pay the most attention to in Iowa.
Allied is a member of Nationwide Insurance and based in Des Moines, IA. A.M Best (the oldest and most recognized provider of financial rating stability in the insurance industry) rates Allied “A +” in financial stability. In addition, Allied offers the following contractor’s insurance coverage:
Contractors advantage- property and inland marine combined (property and equipment)
Contractors advantage plus- higher limits for installation and equipment exposures.
Contractors equipment- tools/equipment
Installation- protects against theft of uninstalled materials from a job site.
Contractors enhancement endorsement- expanded property damage coverage and other valuable coverages
Iowa Mutual Insurance
Iowa Mutual was founded in 1928 in DeWitt, IA, and offers coverage in IA and IL. A.M Best rates Iowa Mutual Insurance “A”. Iowa Mutual specializes in the following classes of
Types of coverage:
Tool and equipment coverage: Coverage for tools; equipment leased, rented or borrowed; building materials while at the job site, stored at a temporary location or in transit.
Pollution and professional liability for damage or bodily injury caused by pollutants or damage caused by the contractor’s error or omission.
Business income covers your company’s loss of income during a policy period due to a covered loss.
Additional insured coverage provides additional insured status when required by contract, agreement or permit, which is typically required by contract to obtain a job.
Grinell Mutual Insruance
Grinell Mutual was founded in 1976 in Grinnell, IA, and offers coverage in IA, Illinois, and Missouri and is rated “A” with A.M Best.
Grinnell developed Master Trades, a commercial program for contractors. This program was built to protect your business with property liability and equipment breakdown coverages.
Coverage options extend to income protection and value-added services like loss prevention and safety training to help keep you and your employees on the job and injury-free.
Additional coverage options include:
Business personal property
Wrapping It Up
As you can see there are many options to choose from when building a policy that meets industry standards as well as your business needs.
It really depends on what type of contracting business you’re running, what needs to be covered, and who needs to be covered.
Let’s get started figuring out which one of these companies will be the absolute best fit for your contracting business.
About Ryan Ruffcorn
Ryan grew up in Keokuk, graduated from Keokuk Senior High, and started his agency in Keokuk from scratch in 2003 after having worked for one of the largest international accounting firms, KPMG, LLP.
Ryan is hardworking; his loyal and trustworthy character is exemplified by the way he does business. He thoroughly enjoys helping clients through the insurance buying process to secure coverage for their most valuable assets.