Business insurance for trades, explained in plain words
Insurance is the part of running a trade business most people buy without really understanding. Here is what the main types do.
General liability
Covers you if your work causes injury to someone else or damage to their property - a flood from a burst fitting, a customer tripping over your cable. Many customers, contractors and licensing boards require proof of it before you start work.
Workers' compensation
Covers medical costs and lost wages if an employee is injured at work. Most states require it as soon as you have employees, and the rules for owners and subcontractors vary by state. Check yours before your first hire.
Commercial auto
Your personal car or truck policy may not cover a vehicle used for work. If you drive to jobs with tools and materials, you likely need a commercial policy.
Tools and equipment
Often called inland marine cover, it protects tools and equipment that travel with you - against theft from the van, for example. For many tradespeople, the tools are the most valuable thing they own.
Professional liability
For trades that give design advice or specifications, professional liability covers claims that your advice or design caused a loss. Not every trade needs it.
Umbrella
Extra liability cover on top of your other policies, for the rare claim bigger than their limits.
Getting the right cover
- Tell your insurer exactly what work you do. Cover that does not match your real work may not pay.
- Ask what is excluded, not just what is included.
- Keep certificates of insurance ready to send - customers and contractors will ask.
- Review your cover every year and whenever you add services, vehicles or employees.
Insurance is not where to save money. One uncovered claim can cost more than years of premiums.