All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).
Some of the risks CGL insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
While businesses aren’t legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A ROOFING COMPANY
Example 1: While removing shingles and other existing roofing materials from a home or business in order to install a new roof, one of your roofers accidentally drops a piece of roofing material on a passerby, injuring them. Your general liability insurance may pay the expenses related to the injury claim. If the injury results in a lawsuit, your general liability insurance may help cover court costs and settlement fees or judgments related to the lawsuit.
Example 2: Your roofers failed to adequately lay down tarps in order to catch all the roofing materials, like shingles and nails. As a result, a visitor or occupant of the building stepped on a nail, resulting in a puncture wound that needed medical attention. General liability insurance may help pay for the treatment of the injury as well as any costs associated with a lawsuit.
Example 3: In order to get a closer look at the new roof, the building’s owner climbs a ladder and subsequently falls, resulting in many cuts and scrapes and possibly a broken bone. Your roofing company’s general liability insurance may pay the expenses related to treating the injury. If the injury results in a lawsuit being filed by the owner, insurance may pay all the court related costs, lawyer fees, and any settlement amounts or judgments that arise.
Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.
The average roofing company in America spends between $500-$1,500 per year for $1 million in general liability coverage.
Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:
Several factors will determine the price of your policy. These include your:
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all roofing companies should obtain:
Workers’ Compensation Insurance
Workers’ compensation insurance is essential for roofing contractors. Employees who work high off the ground with power tools are at an increased risk of experiencing an on-the-job injury, including falls, cuts, and puncture wounds from nail guns. Workers’ compensation insurance helps cover the expenses related to injuries that occur at the work site.
Commercial Liability Umbrella Insurance
Commercial liability umbrella insurance is a type of supplemental insurance that helps cover costs that exceed the coverage limits of your basic commercial insurance policies.
Equipment and Tools Insurance
Equipment and tools insurance helps replace your roofing equipment and tools if they are stolen or become damaged due to an unforeseen event that isn’t normal wear and tear.
In addition to the policies outlined above, there are a few other types of coverage your roofing company may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.
Commercial Auto Insurance
If you use trucks and other vehicles to transport your equipment and/or employees to job sites, you will need commercial auto insurance in order to cover any accident-related expenses if your work vehicle were to collide with another car or object while being driven.
Installation Coverage Insurance
Installation coverage insurance covers accidental damage to other items while the roof is being installed. For example, if one of your roofers drop a nail gun on a glass outdoor table and the glass is cracked, this insurance would pay for the repair or replacement of the outdoor table.
Commercial Property Insurance
If your roofing company owns a brick and mortar location where all of your tools and equipment are stored, you will need commercial property insurance. This type of insurance covers weather-related damage and damage from fires, and it will help with the costs related to repairing your building and/or replacing damaged tools and equipment.
Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.
With this in mind, here are three things you can do to better protect your business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
- Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.
What is included in a business owner’s policy?
A typical business owner’s policy includes general liability, business interruption, and property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
What is the difference between business insurance and general liability insurance?
“Business insurance” is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Do I need insurance before I start a business?
You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.
Will insurance protect my business from everything?
Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.