General contractors oversee complex and expensive commercial and residential building projects requiring a wide range of skilled labor of varying difficulty and risk. This variety means general contractors are exposed to multiple liabilities any time they take on a contracting project, and they need comprehensive coverage before they can safely (and legally) do business. An experienced insurance brokerage like Ansay & Associates will help find available plans that can help protect contractors from these risks.
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Due to the risks involved in general contracting work, insurance is required before undergoing most essential general contractor operations including:
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What's required in WI
Wisconsin law requires a minimum amount of coverage for construction contractors and their subcontractors before they can take on a job or be certified. Certain subcontractor types will have different requirements than others, often depending on risk factors involved. For general contractors in Wisconsin, there are two minimum insurance requirements: general liability (or surety bond) and worker compensation. Larger companies or those involved in larger projects with more employees face additional risk and may require additional coverage.
General liability insurance is a fundamental type of coverage that every contractor should have and is required per WI law. This overarching insurance protects contracting firms and independent contractors from liability in property damage, third-party injury claims and even advertising injury. As part of the requirements of general contractor certification, an entity must prove financial responsibility via an active general liability policy. WI requires a general liability policy covering at least $250,000 per occurrence due to 3rd-party bodily injury or property damage, or the company must have a surety bond in place.
General contractors in WI can also choose a surety bond in lieu of general liability insurance that guarantees payment from the surety company in the event of a claim. The surety company offers a financial guarantee to the state that the principal (the contractor) will fulfill its project obligations.
The contractor entering into this type of bond is still responsible for repaying the bond to the surety company in the event of a claim, but payment will be subject to the bond’s agreement which will dictate surety limits and means of reimbursement.
As is the case with most employers, workers' compensation insurance is required coverage for contractors in Wisconsin. This insurance provides benefits to employees who are injured or become ill as a result of their work. Due to the physical nature of contracting work and the risks involved, these coverages should be robust. Workers' compensation insurance can cover medical expenses, lost wages, and rehabilitation costs in the event of an injury resulting from work.
Again, like most WI companies with employees, any general contractor operating with an employed staff is required to provide unemployment insurance. This coverage supplies a portion of lost wages for any individual who is unemployed through no fault of their own. Any contractor with employees must pay into this system.
If a contractor’s work includes driving any company vehicle for work purposes, this type of policy is required under Wisconsin state law. WI rules require business auto insurance minimums covering bodily injury, property damage and uninsured motorist coverage. This rule applies to any business-owned vehicles across all industries. If a contractor is also operating larger commercial trucks, additional trucking industry coverage requirements may apply.
Contact an AdvisorDID YOU KNOW?
While Wisconsin doesn’t offer a “general contractor” license, Wisconsin law does require any contractor executing the work of a general contractor to obtain a Dwelling Contractor License. Part of that process includes having proof of insurance before a contract may commence. The document should list the effective and expiration dates of the policy, the type of insurance provided, and the limits of insurance, or the maximum amount the insurance company will pay in the event of a loss.
What Else Should I Insure?
Once a general contractor has its required policies covered, it’s smart business to look into other ways a general contracting firm or independent contractor can protect themselves from the risks of the industry. Ansay & Associates have the industry knowledge to guide contracting firms and professionals to the best ancillary insurance options for their needs.
Commercial property insurance is a type of coverage that protects a contractor’s commercial holdings, including buildings, machinery, and equipment from damage or loss. This insurance can cover losses caused by events such as fire, theft, or vandalism from a jobsite. Commercial property insurance is essential for contractors who own their own equipment and tools, which account for a lot of expense and are particularly liable to theft both on and off the job site.
Professional liability insurance (also known as errors and omissions insurance) protects contractors from claims of negligence or mistakes in their work that cause a specific financial impact on a project. This insurance can cover legal fees, settlements, and judgments associated with a lawsuit. Professional liability insurance is particularly important for contractors who provide design or consulting services like architects and interior designers.
All the compressors, power tools, generators and material carried in a work van can amount to a huge loss if they are damaged or stolen. Worse, these workplace essentials are tempting, high-value targets for thieves and black market dealers. Tools and equipment insurance add ons (sometimes referenced as “inland marine insurance”) cover these essential assets whether on the jobsite, in storage or in transit. This goes above and beyond traditional commercial property insurance which only covers theft, damage or loss while on the job.
What about my subs?
A general contractor’s coverage doesn’t typically extend to subcontractors, which makes it a good idea for general contractors to ensure their subs are covered under their own insurance. Some plans may allow a general contractor to extend coverage to its subcontractors as temporary employees, which can be subsidized via administrative fees on the subcontractor’s final pay
What's the Damage?
Contractors in Wisconsin carry elevated risk which sometimes makes acquiring the right level of coverage difficult. All insurance companies weigh the risk of insuring a commercial entity. This risk tolerance is reflected in premiums and is subject to a range of factors.
Get Insurance Savings with AnsayIn the end it’s always best to consult with an expert insurance broker like the team at Ansay & Associates, before you sign on to any policy. Some of the factors our team will consider and account for when trying to find the best options for your contracting:
The extra risk inherent to certain fields of tradework may put some general contractors out of the risk comfort zone of admitted market insurers. Contracting companies seeking general liability insurance generally need to secure coverage via the excess and surplus lines market, which are more tolerant of covering high-risk professions that fall under the purview of general contractors.
General contractors often acquire general liability insurance through Excess and Surplus Insurance markets. E&S insurance carriers are free from some of the regulatory burdens that admitted, state-backed insurance carriers must comply with. As a result, non-admitted insurance companies (E&S) can take on additional risk in offering policies to companies like general contracting firms, whose work environment and project types are more prone to accidental damage, injuries and lawsuits.
The E&S market will tend to have policies with higher premiums, but they offer the same coverages as those in the admitted market. Some higher risk businesses that may need E&S market derived coverages include:
Get the Facts
There are a variety of factors considered when calculating general liability coverage for a contractor. These considerations are often called “the total risk of the job” and include things like the physical job site, material cost, and potential losses.
Most general liability policies do not cover tools in the event they are lost or stolen. Contractors or business owners in need of such protection should acquire inland marine insurance, which covers tools and equipment transported to and from the jobsite.
Personal coverage does not extend to vehicles used in the commencement of any business purposes. For contractors, that means acquiring additional commercial auto insurance to protect against legal or medical costs as a result of an accident.
Who can help me?
As a contractor in Wisconsin, it's essential to have the right insurance coverage to protect your business from potential risks. General liability insurance, workers' compensation insurance, commercial property insurance, and professional liability insurance are just a few of the insurance plans that contractors should consider. By consulting with Ansay & Associates, you can find the right insurance whether you’re a small and agile general contractor, a large contracting firm or an independent contractor.
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Looking to protect your contracting company assets liabilities, contact one of our specialists at Ansay – we’ll make sure your business is protected and that you receive the most competitive rates on the market.
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