A roof is one of a home’s most important safety components, so mistakes in your work could open you up to severe liability. Also, working up high creates the risk of injuring someone down below. To protect yourself, you need to make sure you have the right roofing contractor insurance.
What Insurance Coverage Do Roofing Contractors Need?
Roofing contractors need several different types of coverage to be fully insured. You can buy them separately or as part of a roofing contractor insurance package. Most roofing contractors will select the following types of coverage.
Commercial General Liability
Commercial general liability protects you against liability to third parties. This includes things like dropping a tool on someone and injuring them or having a house get flooded because of a mistake one of your workers made while installing a roof. General liability typically covers property damage, injuries, and the associated legal expenses that come with settling a claim.
For specialized work, such as recommending a specific type of roof, your insurance company may ask you to add professional liability coverage to your policy. Professional liability insurance covers similar claims to general liability insurance, but when the cause of a claim is related to your professional expertise, some insurance companies split that off into separate professional liability coverage.
Commercial Property Insurance
Liability insurance protects others, not your own tools and equipment. If you want protection against theft and disaster damage, you need commercial property insurance. If you own a warehouse or office, you can also get commercial property insurance to protect your physical building.
Commercial Auto Insurance
Vehicle-related claims require a separate insurance policy and aren’t covered by general liability or property coverage. That’s just the way insurance works. You need protection in case you get in an accident during your workday or if you injure someone or back into something while moving your vehicle around a job site. Note that if you have personal auto insurance on a vehicle you use in your work, it generally won’t cover you for business-related claims.
If you have employees in Arizona, you probably have to have workers’ compensation coverage by law. It’s also a smart idea to protect your business. If a worker falls off a roof or gets hurt on the job, workers’ compensation will cover their medical expenses and lost wages. Without this coverage, it’s possible that you would have to cover these expenses on your own.
What is a Business Owner’s Policy?
You may also see options for a business owner’s policy. A BOP will contain a package of the coverages mentioned above, just like roofing contractor insurance. The difference is that a business owner’s policy is often more generic and offered to more types of businesses. That means you may need more customization to make a BOP right for you, while roofing contractor insurance may have everything you need in the standard package.
What Happens if You Don’t Have Insurance?
First, check your local regulations if you can get a license or obtain permits without having proof of insurance. Second, expect clients not to hire you. They want their roofing contractor to be licensed, bonded, and insured both to show that you’re a credible business and so that they have protection in case you make a mistake that costs them money. Finally, if you don’t have insurance and need to compensate someone for property damage or injuries, it could mean depleting your cash reserves or having to dip into your own retirement savings.
What if You Hire Subcontractors?
If you hire subcontractors to perform certain parts of your roofing jobs, you need to make sure they’re covered as well. You can ask for proof that they have insurance just like your customers ask of you, but this may not be enough. If their policy gets canceled and something happens, you could be financially responsible to your customer and third-parties for any claims the subcontractor isn’t able to pay. Therefore, you might want to ask your insurance agent about making sure your insurance extends to your subcontractors.
How Much Coverage Do You Need?
There are no set rules on how much coverage you need. Instead, you should think about the size of potential claims against you. A bodily injury or wrongful death claim can easily start in the hundreds of thousands of dollars if the cause was dropping an object off of a roof. If a roof you installed fails and causes significant damage to the building, you could be sued for the entire cost of the repair or reconstruction. Most residential roofing contractors will want to start with at least $1 million in liability coverage. If you work on higher-value homes or commercial properties, you may want to go even higher.
How Much Does Roofing Contractor Insurance Cost?
The cost of roofing contractor insurance depends on the coverage options you choose, your policy limits, the type of work that you do, how long you’ve been in business, and your claims history. Each roofing contractor will typically receive a different quote even when they’re doing similar work. Remember that each insurance company has their own way of setting rates, so it’s important to shop around. Don’t assume that the insurance company that has always been cheapest is still cheapest, as changes in your insurance profile may now get you a better rate somewhere else.