Insurance for Contractors
The construction industry can be a complicated, highly mechanized operating environment. It’s because of this that safety regulations are so strictly followed. Within the State of Texas, any contractor or construction company needs to have contractor insurance if it hopes to protect itself against damage and injury claims.
Now, Contractor Insurance varies a little bit from other types of insurance cover, and it’s important for people, especially those working in the industry to understand exactly what the law sets down in their regard. Towards that end, here’s a brief look into Contractor insurance.
While this insurance type will cover contracting and construction businesses against liabilities arising from personal injury, false advertising, slander, and damage, there are two main categories of policies issued under this type of policy occurrence and claims-made. It’s important to understand the difference between the two.
1. Occurrence Liability Policies
These policies will cover damage or injuries that occurred while the policy was still in effect. Even if the injured party makes their claim after the policy has expired, if the incident occurred while it was still active, it will be honored.
Occurrence-based policies are significantly more popular among businesses as they offer relatively simpler, more complete coverage. The downside here is that they will tend to be somewhat more expensive regarding premiums because claims can be paid out even long after a policy has expired
2. Claims-Made Liability Policies
These are policies that will cover damage or injury claims that occur while the policy is in effect. The point to note with this type of policy is that the claim must be made while the policy is still in effect for it to be honored. Should the claimant allow the policy to expire before making their claim, it shall not be honored.
Even though the premiums to be paid with this type of policy are relatively lower due to the specific time-window in which claims can be made, this model still doesn’t appeal to most businesses because it means that should a claim be made after the policy period is over, the business might be forced to pay out of its own pocket.
What many organizations will do is pair-up their claims-based policies with extended coverage instruments such as Run-Off Coverage and Prior Acts. These instruments are designed to cover the business against claims made after a policy ends, and before it took effect, respectively.
Every company operating in Texas should look at the options before them properly by consulting with reputable agents. They will be able to guide them in making the very best choice for their business.
