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6 Costly Construction Business Protection Myths

Contractors and construction professionals work hard to build their credibility among clients and to grow their business. But when it comes to business insurance, misinformation can prevent contracting or construction business owners from fully safeguarding their small businesses.

It only takes one allegation from a disgruntled employee or customer to devastate a well-run contracting or construction business that doesn't have adequate coverage — or any at all. Should you be the victim of a lawsuit, fire, injury, or any other unforeseen calamity, a lack of insurance can permanently shut down your contracting or construction business and even cripple your personal finances.

Read on to discover how you can protect your business and yourself from uncertainty.

Contracting Business Insurance Myths Busted

Contracting Business Insurance Myths Busted

Many small contract or construction business owners may not realize the extent to which they are putting their businesses — and in many cases, their personal assets — at risk when they don't have accurate information about business protection.

To make sure you are prepared for unexpected events, take a look at these common small business insurance myths below, such as…

  • Business Insurance Myth #1: "You can't squeeze blood from a turnip." Unfortunately, everybody and every business can be sued. If your construction or contractor business is found liable and a money judgment is rendered against your business, that judgment can be collected. The judgment liens do not expire and can be renewed until they are settled. This means wages can be garnished, equipment can be seized and sold, and bank accounts and assets can be seized to pay the judgment. At the hands of a persistent attorney, everyone — no matter how modest your earnings — is collectible.
  • Business Insurance Myth #2: "I am a professional contractor, and I follow all state regulations. I don't expect to be sued by either customers or employees." The best-run business can still be sued in today's litigious environment. Even if your contract or construction business is not found liable and no judgment is awarded, the costs to defend a claim in court can bring a business to a full stop, consuming precious time and resources. Attorney fees alone can be enough to strap a small startup. Luckily, General Liability Insurance policies can pay for the full defense of your contract or construction business regardless of whether the claim is true or false.
  • Business Insurance Myth #3: "I'm protected by my contracts." In cases of gross negligence, punitive damages could be awarded in addition to general damage awards. Contracts and agreements put into place between clients, vendors, employees, and 1099 contractors will only recognize transfer of liability for certain types of negligence in common law torts.
  • Business Insurance Myth #4: "I have a home-based business so I am covered by my homeowner's policy." If you are an independent carpenter with a home-based operation, it's important to know personal homeowner's policies exclude coverage for business pursuits and extra buildings (such as converted garages) frequently used for business. They also don't cover the loss of business data, damage to equipment, or injuries to clients and colleagues that occur on your premises. However, you can purchase additional coverage that will extend your homeowner's policy to include property, equipment, and general liability coverage for your home-based business.
  • Business Insurance Myth #5:"I only need insurance if my client's contract requires it." Depending on where your business is located, your contract or construction businesses may not be required to have insurance unless a client contract requires it. Even so, insurance is a valuable asset to your overall risk management plan. That's because small business insurance is intended to help your business get back on its feet following a loss. Without it, your business may struggle to operate again. Small business insurance allows construction and contracting businesses the confidence and freedom to grow their businesses without the stress of worrying about unforeseen situations.
  • Business Insurance Myth #6: "A contract or construction business with no employees doesn't need Workers' Compensation coverage." Workers' Compensation requirements vary from state to state, but the general rule is you need to carry Workers' Compensation if your business has employees. As an independent carpenter or small business owner, you might want to consider Workers' Compensation even if you don't have any employees. This coverage can protect you as the owner if you're injured at work. Contact an insureon agent for more details about your state's requirements for Workers' Compensation coverage.
Protect Your Contracting or Construction Business

Protect Your Contracting or Construction Business

When you're ready to give yourself a little peace of mind and allow your construction or contracting business the security to grow, you'll soon discover that you have lots of choices for business insurance. Contact an insureon agent today to learn about which policies offer the appropriate protection for your contractor business.

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