Contractor General Liability Insurance

General Liability is a type of insurance policy that offers protection against third party injuries such as negligence, property damage, bodily harm, or injury, or loss of limb or life. It acts like a stable coverage base and a foundation for strong defense for contractors. It is a requirement before a contractor can begin any construction job and cover liabilities that would result from faulty work or other third party claims.

Why does a contractor need General Liability insurance?

The construction industry does have risks, and one of the most significant risks is third party injuries. They include lawsuits for accidents, medical bills, or property damage and construction defect claims. Some of these claims are very costly. Contractors insurance California offers protection in many different situations in case something goes wrong, and your company is to blame.

Contractors face high risks, and this type of insurance help pay expenses related to the different kinds of risks. For instance, if property damage occurs during innovation, or a visitor gets injured at your job site, the insurance can cover the cost of repairs or medical bills.

How contractor General Liability insurance protects homeowners

A general contractor is responsible for the quality of workmanship, safety, legal compliance, and everything that happens on the job site. Failing to hire a contractor with General Liability insurance could potentially cost you everything that you own. If the unexpected happens, you could be sued and end up declared bankrupt. Once state laws declare bankruptcy, you are only allowed to keep a minimal amount of wealth, including property.

Damages involving a contractor working on your home, such as faulty works, may not be covered by your homeowner’s insurance. In such a situation, the contractor’s General Liability insurance comes in handy. If accidentally, the contractor’s work causes damages to your home, such as house fire, most likely, your homeowner’s insurance company will do the repairs but reach out to the contractor’s insurance company for reimbursement.

If a contractor does a poor job, for example, improperly installing roof shingles, a standard policy won’t rectify such a situation because most exclude inadequate workmanship from its protections. A contractor with General Liability insurance would have to redress that by either replacing or repairing the shingles.

Your homeowner’s policy may not cover additions or newly built rooms. It only covers your existing home. Builders risk insurance provides coverage during home remodeling. This gives you the peace of mind knowing your coverage couldn’t help cover your whole house just in case of the unexpected.

When renovating your home, you make a lot of decisions. It’s essential to partner with the right contractor to ensure sufficient insurance coverage.

Risks of hiring contractors without General Liability insurance

If a contractor is injured on your property, you as a homeowner can be sued. This can happen when the contractor does not compensate workers. When you hire a contractor that does not have the proper insurance coverage, you will be assuming all the risk of any injuries or work mistakes that may occur at home.

Accidents happen far too often. If your contractor doesn’t have a General Liability, who will pay for the extra damage to your home? Do you expect a contract that couldn’t pay for insurance coverage to now pay additional money? Will you take him to court to recover damages? Who will pay for the attorney fees? There are so many questions, but still no answers.

Generally, contractors who don’t value worker’s compensation liability or coverage have much fewer costs than adequately licensed contractors. But, if an accident were to happen, as the homeowner, you could end up losing a lot more. The potential risk of hiring a contractor who doesn’t have a General Liability policy outweighs the benefits.

To sum it up, homeowners can protect themselves from liability by hiring only licensed contractors and confirming thy have the proper insurance coverage in place before the work begins. The best defense is to do your homework upfront and get to know how contractor general Liability protects homeowners. Make sure the contractor you hire has insurance coverage and, in this case, contractor general liability insurance.

Why Does Contractor Bond Pricing Depend Upon Your Credit?

Are you keeping control of your credit and making payments on time? Are you not exceeding your credit limit?

Not too much debt on your shoulder? These questions are fundamental as they directly affect your credit score.

First Things First…What Is A Credit Score?

Now, let us first look at what credit score is. A credit score is a 3-digit number generated automatically by algorithms, used to determine the likelihood of a debtor honoring or defaulting on their credit obligations. A credit score can either be good or bad. Good credit score means you are eligible to get a loan which in turn means saving hundreds of dollars for you when it comes to the interest rate.

On the other hand, bad credit score gives a negative impression on the lender as they consider lending you a risky financial decision. , but aside from them, other institutions may call your credit score to question before they can engage with you in any business ventures. Some of these include insurance companies, construction, telecommunication industries, and contractors.

Contractor Bond: A Surety To Pay

Before assigning any job to a contractor, a thought that generally comes in mind is who will pay for the loss?” A loss is something that you cannot predict. Losses have this element of surprise that makes both parties want to premeditate on steps to undertake in the event they occur.

For this purpose, the contractor bond is a blessing as it involves three parties who ensure that all work is done according to the agreement statement.

Contact a company that offers California contractor bond services to find the best price.

Contractor Bond Pricing

There are different types of contractor bonds, and each has its own cost. We have a bond lower the price of the project, a bond lower the price of the bond and lastly, there is a contractor bond that’s similar is the case with high-risk projects. Your bond rate is highly dependent on your credit score.

However, you should never forget that there are other factors also which help in setting the price of the bonds. For example, some projects are riskier than others so that the high-risk projects will have a higher rate as compared to low-risk projects.

Contractor Bond Depends On Your Credits

As already been mentioned, a good credit rating shows your creditworthiness. Mostly, it shows that you can pay your debts on time, can properly manage your credit limits and have proper records of your bank statements. Your credit score shows your reputation and signifies how well you have paid your companies. High credit score means that you can be trusted when it comes to a favorable settlement of debts. Similarly, a low credit score marks a negative impact on the contractor.

Likewise, a contractor company will surely recommend and put more trust in a person with a good credit score by looking at their past payment records. Credit score with 750 and above is considered an excellent, making it easier for you to pay less for the bond. On the other hand, 550 or lower credit score comes under poor credit rating, adversely affecting your eligibility.

Why Good Credit Score Is Necessary

The price of a contractor bond and credit score are inversely proportional to each other. The higher the credit score, the lower the price of a bond. This means that a company may not be reluctant in dealing with you as you have been diligent in clearing all your past payments. As a result, a confidence level is developed. Similarly, a low credit score means there is a lower trust level by a company which results in a high price of a bond.

Obviously, you need to put trust and confidence into someone before hiring or working with them. You will need to look at their financial position, their credibility, and their payment mode beforehand to save yourself from a possible risk of defaulting in the future. Same is the case with bonding companies. Before issuing a contractor bond, they look at all these aspects to know whether the client has the potential to pay or not, and the best way is to have a look at their credit score.

For example, construction is a high-risk project which includes, among other risks, the risk of non-completion of work on time, damage during work, late payments to laborers, to mention but a few. Going by these, a contractor bond will be given to only those serious client who have a good credit score and those who have proven they are least likely to default with their payments.


A contractor bond is highly dependent on your credit and credit score. The higher the score, the higher the likelihood to get a contractor bond with the lowest price.

Always Make Your Contractor Shows Proof of Insurance

Always Make Your Contractor Shows Proof of Insurance

Dr. Phil likes to say that if you choose the behavior, you’ve also chosen the consequences. Projects involving contractors are one of the cases where Dr. Phil’s perception fits perfectly. Such projects are often big ones, and (God forbid) if something goes wrong, the chances are that the damage could be costly, financially. The worst-case scenario is that someone’s life may be in danger. To avoid all these unnecessary complications ask contractors for insurance, and to help you understand how serious this is, let me point out a few things.

It’s Not My Fault!

That’s what your contractor will either imply or say explicitly and without shame, if you make the mistake of hiring one without insurance. But what is the significance of the contractor providing proof of insurance in the first place?

Accidents happen, and when they do, someone has to be held responsible, and someone has to pay for the damages. You don’t want that person to be you, especially if it is not your fault.

What Insurance?

Any contractor hired for a project ought to be in possession of a General Liability Insurance. Moreover, if he or she will involve subcontractors, carpenters, electricians or any other workers in the project, he or she should also have Workers Compensation Insurance and Auto Coverage Insurance (only if vehicles will also be involved).

General Liability Insurance is a guarantee that the contractor will take care of any damages that take place while working on your project. The Workers Compensation Insurance is for handling any accidents that involve the third parties the contractor brings into the project. The auto or car insurance does what you already know; takes care of any vehicle-related damages.

What You Stand to Lose

Now, if for some reason you were ignorant and happened to hire a contractor without confirming their status as far as being insured is concerned, if some accident occurred while they are working on your project, believe it or not, they might sue you.

They’ll say the accident was your fault; that it was your house, or office, or poor working conditions, or whatever they’ll come up with for pinning the blame on you, just to avoid paying for the damages. I’m sure that doesn’t sound nice at all, and it’s a situation you don’t want to deal with. The damages could be in terms of thousands of dollars or millions. Again, worst case scenario, it could involve someone’s health.

Another danger of hiring a contractor without proof of insurance is that they may disappear before completing the project. This scenario is particularly true if you happen to be loaded such that you pay them in excess before they complete their task.

Protect Yourself, Protect Your Assets

You can see that you stand to lose way too much just for ignoring this essential aspect of the client-contractor relationship.

Ask contractors for proof of insurance before hiring them for your project. It’s that simple; just ask them for it. If a contractor indicates that they have none or start behaving funny regarding your reasonable request, keep looking; that person’s troubles are not worth your time and money.

Furthermore, if a contractor seems cheap, and you haven’t yet confirmed whether they are insured, the chances are that they are not. Important projects should cost as much as their degree of significance.

When dealing with expensive projects, you should always take the necessary measures to ascertain that you only pay for what the project is worth; not unnecessary extra damages. Always ask your contractors to provide proof of insurance before engaging in such crucial projects.

4 Types of Contractor Bonds

4 Types of Contractor Bonds

In general, there are different types of contractor’s bonds that you need to have before signing to undertake a certain construction project. These bonds include; Bid bonds, a licensing bond, a performance bond, and a payment bond but not limited to this list only.

Performance bonds

A well-defined performance bond is a tool to ensure financial assurance that a project will be implemented in accordance with the owner’s expectations, regardless of the contractor initial conditions. For instance, the contractor may fail to execute the work according to the agreements signed in the contract acceptance documents, the guarantor who has signed a performance bond has the authority to make payments to another contractor to finish the project. Performance bonds are ordinarily used in property development where the clients or investor may require a supplier or contractor to ensure that project managers receive such securities to ensure that labor costs are not lost in case of the project failure.

Payment bonds

A payment bond is used if the project has no adequate money so the client will pay the contractor according to the amount of work completed but not the whole project. The client may subtract contact another contractor after they get more money. The payment bond guarantees that the client pays for the work and material which the project has consumed up to that level. In case a payment bond had not been acquired and if such subcontracting fees are not paid, the owner who has paid to the Contractor may be confronted with subcontractor’s liens or against a completed project.

Contractor’s License Bonds

Contractors are required by law in many countries to be issued with a contractors license so that the clients can check the contractor’s ability to perform a certain project before accepting that contractor to undertake the project. Bonds of this type generally pay for property damage caused by mismanagement of materials or theft of projects tools as result incapability of the contractor’s company to provide security of these items.

Bid Bonds

Bid Bonds – Provide the clients with a guarantee that the Contractor has tendered a bid and they have disclosed all material information that can be used in legal cases and they have done it good faith. This means they will execute the project without such intention extending the time for implementing the project or the project price and has the ability to obtain the requested amount.

Bonds are tools that provide financial assurance when a construction project is not implemented as per the first plan. If the Contractor leaves work or they become insolvency, this contractors bonds will cover this amount up to the amount of the guarantee.