In the construction industry, contractors face various risks that extend beyond the scope of their standard insurance policies. A single accident on-site, a claim against your employees, or even a car crash involving company vehicles can result in lawsuits and financial burdens. For contractors, it’s essential to have comprehensive insurance coverage that meets the demands of their business and also goes above and beyond in protecting them against unforeseen claims.

This is where an umbrella liability insurance policy becomes a vital asset. It provides an extra layer of coverage that helps safeguard contractors from significant financial loss.

What is contractor umbrella insurance?

Contractor umbrella insurance, also known as an umbrella liability insurance policy, serves as an additional layer of protection on top of your existing liability policies. It kicks in when the limits of your primary insurance are exhausted, providing you with extra coverage for costly claims that could potentially exceed standard policy limits.

For contractors, this type of insurance is especially important because of the high-risk nature of construction work. Umbrella insurance for construction professionals ensures that their business remains financially secure, even when faced with large liability claims.

What does umbrella insurance for contractors cover?

Umbrella insurance for contractors provides extended coverage for several types of liability claims. While your primary policies–such as general liability or commercial auto insurance–offer protection, they have coverage limits. Once those limits are reached, the umbrella insurance steps in to cover the rest.

General liability claims

Umbrella insurance can extend the coverage of your general liability policy, which typically covers third-party bodily injury, property damage, and legal fees. For example, if a visitor is injured at your construction site and the claim exceeds the limits of your general liability policy, umbrella insurance will cover the remaining costs.

Employer liability claims

Contractors' umbrella insurance also extends protection to employer liability claims. This can include claims related to employee injuries that occur on the job, beyond what workers' compensation might cover. Should legal fees or settlements surpass your standard employer liability limits, umbrella insurance will provide additional coverage.

Commercial auto claims

If your business involves the use of vehicles, commercial auto insurance is a must. However, large claims, such as accidents that result in serious injuries or property damage, can quickly exceed your commercial auto policy limits. Umbrella liability insurance for contractors ensures that any excess costs from auto claims are covered, providing peace of mind.

Why do contractors need umbrella insurance?

Contractors operate in a high-risk environment where the potential for costly liability claims is always present. Umbrella insurance offers several key benefits that make it an essential policy for construction businesses.

Increased liability protection

Umbrella insurance provides increased liability protection by covering claims that exceed your primary insurance policy limits. This extra coverage is vital in protecting your business from significant financial loss.

Contractual obligations

Some clients and projects may require contractors to carry a higher level of liability coverage. Contractors umbrella insurance ensures you meet these contractual obligations without having to purchase multiple, separate policies.

Protecting assets

One of the main reasons contractors invest in umbrella liability insurance is to protect their business and personal assets. Without adequate coverage, your business could face lawsuits that threaten its financial health.

Financial relief

The cost of legal fees, settlements, and medical expenses can add up quickly in the event of a claim. Umbrella insurance offers financial relief by covering these additional expenses when your primary policies reach their limit.

How much does umbrella insurance coverage cost?

The cost of an umbrella liability insurance policy for contractors varies based on several factors. While it is affordable for most businesses, contractors should consider specific aspects of their business when determining the cost of coverage.

Number of underlying policies

The more underlying policies you have—such as general liability, commercial auto, or workers’ compensation—the more coverage your umbrella insurance will provide. This can influence the cost of the policy.

Type of business

Different types of contracting businesses carry different levels of risk. Higher-risk businesses, such as those involved in heavy construction, may face higher premiums for umbrella coverage.

Number of employees

The size of your workforce can also impact the cost of umbrella insurance. More employees typically mean greater liability exposure, which can increase the cost of coverage.

Amount of revenue

Higher revenues often mean larger claims in the event of a lawsuit. As such, businesses with greater revenue streams may need to pay higher premiums for their umbrella insurance policies.

Location of business

The location of your business can affect the cost of your policy. Businesses operating in areas with a higher incidence of claims or litigation may face higher umbrella insurance costs.

When would a contractor not need commercial umbrella insurance?

In some cases, a contractor may not need an umbrella liability insurance policy. Understanding your business’s level of risk and the coverage you already have is key.

Low-risk operations

Contractors involved in low-risk operations, such as smaller-scale projects or administrative work, may not need the additional coverage that umbrella insurance provides. If your operations are unlikely to result in high-cost claims, your current coverage may be sufficient.

Adequate primary coverage

If your primary policies offer sufficient coverage for the types of risks your business faces, you may not require an umbrella policy. However, it's essential to regularly review your coverage to ensure you’re fully protected.

How To Get A Contractor Umbrella Quote

To get a quote for contractor umbrella insurance, follow these simple steps:

1. Evaluate your current coverage: Review your existing liability policies to determine your current limits.

2. Identify additional risks: Consider areas of your business where you might need extra protection, such as high-value projects or vehicle-related operations.

3. Consult with an insurance provider: A reliable insurance provider, such as Hotchkiss Insurance, can help you assess your needs and recommend the best umbrella policy for your business.

4. Get multiple quotes: Compare quotes from different insurance providers to ensure you're getting the most competitive rate.

5. Customize your policy: Tailor your policy to cover the specific risks your contracting business faces.

Factors to Consider When Getting an Umbrella Policy

When choosing an umbrella liability insurance policy for contractors, several factors should be considered:

• Risk level of your business: The more hazardous your operations, the more coverage you may need.

• Size of your projects: Larger projects often come with greater risks and potential liabilities.

• Client requirements: Ensure your umbrella policy meets any contractual obligations imposed by clients.

• Future growth: If you plan to expand your business, make sure your umbrella policy can accommodate future needs.

Need To Extend Your Business Insurance Coverage? Reach Out To Hotchkiss Today!

​​Umbrella liability insurance is an essential safeguard for contractors in the construction industry. It provides additional protection against large claims that could otherwise surpass the limits of your standard insurance policies. With coverage for general liability, employer liability, and commercial auto claims, umbrella insurance ensures that your business remains financially secure even when faced with unexpected risks.

If you’re looking to extend your business’s insurance coverage, Hotchkiss Insurance is a trusted partner for contractors in Texas. With a strong reputation for providing business insurance solutions for home builders, independent trade contractors, general contractors, and commercial contractors, Hotchkiss Insurance can help you secure the coverage you need. Get started today!