3 common claims every contractor should know about

Close up of nail on wooden plank with saw dust floating in background
5 minute read  

Running your own contracting business is tough—dealing with the aftermath of a loss can make things even tougher. But that’s why we’re here: to drop some knowledge on common contracting claims that you could face, so you can prevent a loss before it happens. Whether you’re a homebuilder, renovation specialist, drywall installer, electrician, or a jack– or jill-of-all-trades, here are some common claims you should safeguard your business from to prevent a potentially expensive loss.

These 3 claims could put a dent in your business

1. Theft could hammer the last nail in your business’ coffin

Theft is usually a concern for retailers, but contractors should be wary of theft as well. Just recently in Waterloo, Ontario, three men were charged with stealing over $5,000 worth of tools and equipment. These men broke into numerous construction sites around the region, stealing drills, circular saws, and other commonly-used contracting equipment. In London, Ontario, one local company has fallen victim to theft ten times since 2015. Some of the stolen items were worth as much as $20,000. The city itself reported roughly 60 incidents in 2016, and at least 69 in 2017.

Some items stolen from construction sites can cost as much as $20,000 to replace.

Preventing theft should be a top concern for contractors. Replacement costs for your tools and equipment can add up fast, and not having your proper toolkit could result in a loss in revenue. Can your business’ bank account survive these costs? Here are a few tips that can help you prevent theft on your site:

  1. Keep a detailed and up-to-date inventory of your equipment. Details should include things like the make and model, the serial numbers and product identifications, the dates of purchase, the value or cost, photos, and descriptions.
  2. Keep all receipts and invoices from equipment purchases. This will come in handy if you ever need to file a claim with your insurer.
  3. Lock your equipment in a secure, well-lit looking whenever leaving your jobsite.
  4. Invest in a strong video surveillance system to help you keep an eye on your jobsite while you’re away.
  5. Implement a strong loss prevention program. Engage your employees in the process and educate them on best practices.

Preventative measures may only take you so far, which is why having the right shield to protect you in these situations is also very important. Commercial property insurance with TruShield Insurance is designed to help mitigate the costs associated with theft, along with other risks facing your business property, including:

  • Fire
  • Vandalism
  • Flood
  • Mechanical or electrical breakdown

2. An honest mistake could really unscrew your business

No matter how much a perfectionist you might be, mistakes can and do happen. One common claim that contractors often face is damage to a third party’s property. For example, let’s say you’re installing a new dishwasher for a customer, and during the process you damage their kitchen counter and cabinets. You could be on the hook for costs related to the damage. And that’s just one example: claims involving property damage can get as high as $100,000, depending on the type of damage done. Without insurance coverage, you may have to pay that entire cost out of your own pocket.

Without insurance coverage, you may have to cover the entire cost of the property damage out of your own pocket.

Before you panic, look up the definition of CGL insurance—actually, we’ll just give it to you. Commercial general liability insurance, or CGL insurance for short, is designed to protect small business owners when they are found legally liable for bodily injury or property damage to a third party. In other words, if you face a lawsuit because someone claims your negligence caused them bodily injury or resulted in damage to their property, you’d look to your CGL policy to help. So if you were to accidentally break a window, this insurance could help with the costs incurred if you were found legally responsible for the incident.

3. A car accident could drive your business into the ground

Can we ask you a few questions? And be honest — your business’ bank account could be at stake.

  1. Do you drive your personal vehicle to and from jobsites?
  2. Do you transport business equipment in your personal vehicle on a regular basis?
  3. Do your employees often drive your personal vehicle for work-related purposes?
  4. Do you have any marketing or advertisements on the outside of your vehicle promoting your company?

If you answered yes to any of these questions, then you should consider getting commercial auto insurance for your business. Auto collisions are a common claim for contractors, and without a commercial auto insurance policy to protect you, you could personally be on the hook for the repair or replacement costs.

Did you know if you have any sort of advertisements on the outside of your vehicle, your personal auto insurance may not cover you anymore?

There are a few key differences between personal auto insurance policies and commercial auto insurance policies that can leave business owners vulnerable to a loss. For example, let’s say you’re driving from one jobsite to another and you have some very expensive tools and equipment in the back of your pick-up truck. If you’re involved in a fender bender, your personal policy may cover the damage to your vehicle, but it may not cover any damage done to your business property (i.e. the tools and equipment in the back of your truck). Depending on what exactly you were transporting at the time of the accident – and the extent of the damage caused by the accident—things could get expensive. Our claims data found that even a minor fender bender for a commercial vehicle could cost up to $10,000 on average, and in a worst-case scenario where the vehicle is written off, it can be upwards of $30,000 on average. Another interesting fact: if your car has any sort of advertising on the outside promoting your small business, your personal policy may not cover any damages in the event of an accident. So before you commission that awesome custom design to stick on the side of your pick-up truck, make sure you talk to your insurance provider first.

With a small business comes big responsibility

The truth is, running your own contracting business isn’t always easy, but it can be incredibly rewarding. Being aware of the risks your business faces day-to-day can help you better prepare and avoid a potentially devastating loss. It also helps to have the sharpest tools in your shed… so to speak. Ensuring you have the right coverage to protect your construction or contracting business is another key piece to the small business puzzle. CGL insurance, commercial property insurance, and commercial auto insurance are just a few examples of how TruShield can help keep you protected from risk.

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This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information. Terms, conditions and exclusions apply to coverage – see policy for details.