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IPS / Lighthouse Insurance Group Blog: contractors insurance

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Small ToolsTools and equipment are key to the success of contractors of all types.  Whether you work in construction, service and repair, lawn maintenance or pest control, you could quickly be out of business if you were suddenly without the tools that enable you to do your work.  Should you suffer a loss, proper insurance covering your tools and equipment can mean the difference between being back in business quickly and being forced to close your business.

Insurance for contractor's tools and equipment is easy to obtain.  Most often, it is added to a commercial package policy along with the contractor's other lines of insurance, but it can be purchased on a stand-alone policy as well.  This type of coverage falls under a broad category of insurance called Inland Marine.  Most types of inland marine insurance are intended to provide coverage for items that move from place to place - it doesn't restrict coverage to a specified location like other forms of property insurance.  This means that tools and equipment covered by this type of insurance will be covered whether at your place of business, while traveling in a vehicle, at a job site, or most anywhere else subject, of course, to territorial limitations in the policy.

Tools and equipment can be covered as scheduled or unscheduled.  

The unscheduled form is generally for smaller items valued up to $1,000 per item.  A limit of insurance is chosen to cover all of these items on a blanket basis without the need to list everything.  Depending on the type of policy, the limit of insurance needs to be high enough to REPLACE all of your small tools, or to completely cover their ACTUAL CASH VALUE.  

The scheduled form is generally for larger items valued at $1,000 or more per item, such as generators, riding mowers, excavators, bulldozers, and the like.  Scheduling these items simply means that the policy will individually list each covered item on a schedule describing the item and the value it is insured for.  

A single policy may include both scheduled and unscheduled items. Most insurance companies have a minimum deductible of $500 and most policies stipulate that coverage for theft does not apply if items are stolen from an unlocked, unattended vehicle.  In other words, items must be locked and protected at all times in order for insurance to apply.

Important things to keep in mind when it comes to your tools and equipment: 

  • Don't rely on homeowner's insurance to cover business property.  At best, most homeowner policies offer only a small amount of coverage for property owned or used by a business and it is often limited to loss that occurs on the home premises.
  • Keep good records of all items.  Any time a claim is made for loss to property, the insured person or business must substantiate the fact (prove) that the items existed.  Receipts are best the best proof, but manuals, photos or other documents can be very helpful as well.
  • Make a police report right away if you suspect your loss is caused by a crime (vandalism, theft, etc.).

    For more information on insurance for Contractor's Tools and Equipment Contact us at 800-220-5582, visit the CONTRACTORS INSURANCE page on our website, or contact us online.
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    image of two contractors shaking handsIn many areas of the United States sole proprietors are not required by law to have liability insurance or workman’s compensation. In order for homeowners to avoid footing the bill in the event of an accident or a renovation gone awry, it is important for consumers to obtain proof of insurance before the start of any project.

    It’s important for homeowners to understand contractor liability before the start of any renovation in order to protect themselves. As long as a contractor has general liability insurance, workman's compensation, and there's not gross negligence on the homeowners part then they will not be held accountable in the event of an injury or accidental damage.

    Homeowner’s insurance policies generally do not cover incidents involving uninsured and/or unlicensed contractors. Uninsured contractors also tend to be unfamiliar with building codes and are usually unable to apply for permits. When a project lacks the proper permit(s) a homeowner can be ordered to remove or repair the work that has already been completed.

    Regardless of the project’s size it is very important to have a written contract that gives a clear scope of all work to be completed.  Once a written agreement is signed homeowners should request the contractor's insurance binder and follow up with the insurance company to make sure the policy covers the each aspect of the project. Some contractors buy inexpensive policies that do not cover bigger projects. For and added layer of protection clients can be asked to be added to the contractors policy as 'additionally insured. Bottom line, a project should not begin until a written contract is signed and insurance is verified by the consumer.

    Licensing agencies often maintain a guaranty fund and offer mediation services in case there is a dispute between one of their contractors and a consumer. Licensing agencies can also revoke a dishonest contractor’s license which works to encourage honest hard work from licensed construction professionals. Unlicensed workers go in and out of business readily and can more easily avoid civil suits.

    For more information about Michigan contractors insurance, give Insurance Planning Service a call at 800-220-5582.

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    Lighthouse Group Main Office in Grand Rapids, MI
    Mailing Address | P.O. Box 530009, Livonia, MI 48153

    Phone: 734.421.9900 | Toll Free: 800.220.5582 | Fax: 734.421.9911

    Also serving these Detroit area communities in Michigan: Livonia, Farmington Hills, Ann Arbor, Southfield, Plymouth, Canton, Westland, Northville, Novi, Dearborn, South Lyon & Walled Lake