Advantage Insurance

Contractor Resource Center

The 5 Benefits

of General Liability Insurance

Learn the real reasons why successful contractors make General Liability part of their business plan.

Insurance companies are always selling "worse case" scenarios - risk, risk, more risk.

But, how about what's most important to you as a business owner? Like growing your business, attracting more customers and increasing revenue.

Did you know the right General Liability insurance can actually help get you more and better-paying jobs, in addition to protecting your assets?

Here are the real reasons why contractors choose to carry General Liability insurance.

Increase Your Commercial Reputation

In today’s world, proper insurance is a hallmark of a professional, well-run, company. Along with your license, insurance is a credential that legitimizes your business in the eyes of potential customers.

Having General Liability tells customers your business is dependable because you

took the necessary steps to protect their interests, as well as your own.

This is why customers are more likely to hire a contractor who has insurance versus someone who is uninsured.

Selling Customers

"Contractors don't have salespeople, Contractors are the salespeople for their business."

Insurance has a lot to do with promoting and selling your services to customers.

So, let's look at insurance from the point of view of your potential customer:

A customer is taking a risk by bringing outside workers onto their property and into into their home.

Customers are spending money to hire you – and who doesn’t have some worry where money is going out the door?

Customers experience stress making decisions about design and construction, and hoping things will turn out the way they want.

Part of selling customers is putting their mind at ease, giving them confidence so they'll pull the trigger and hire you.

One way to ease customers' minds is by reassuring them their property is protected because your work is fully covered by General Liability insurance.

Your Commercial Reputation

"The reputation of your business is impacted by whether or not you have the correct insurance."

Even if you never have an accident (and hopefully you never will), the reputation of your business is affected by whether or not you have the correct insurance.

General Liability is something you should promote to increase your company’s commercial reputation, so customers are more likely to hire you and recommend you to friends = referrals.

Here are some of ways you can use General Liability in sales and promotion:

State in all promotion – business cards, ads and bids – that your work is insured.

Promote that you are Licensed, Bonded & Insured. This phrase tells customers it's safe to hire you because your jobs are guaranteed by insurance.

Offer to provide customers a Certificate of Insurance with them named as an“additional insured”. This is a tremendous value-add for customers that shouldn't cost you anything extra (if you have the right insurance agent).

"Additional insured” means: a person or entity (i.e. your customer) who enjoys the benefits of being insured under an insurance policy, in addition to whoever originally purchased the policy (i.e. you, the contractor).

By showing customers a Certificate of Insurance with their name listed as an "additional insured", you give them additional security, re-affirming that you care to protect their property.

Before you buy an insurance policy, always ask the agent if there are extra costs to add an "additional insured" to your policy. There shouldn't be, if you have a good agent.

It is good business to do these "little things" that show customers you care. These"little things" enhance a business' reputation and create the foundation for valuable word-of-mouth that small businesses rely on.

1. Increase Your Commercial Reputation >

Protect Your Business and Customers

Most contractors are experts and work safe. But there are other people to consider -

customers, their friends and family, your employees, subcontractors, and anyone else who's near your job site. In business, sometimes people make mistakes that are completely out of your control. Sometimes there's an accident or a product turns out to be defective or a customer complains.

As the contractor, you're who is most financially liable for any property damage, injury or legal complaints related to the jobs you do, no matter who is at fault.

What General Liability insurance does for you is transfer these types of financial liabilities over to an insurance company, instead of you as the contractor assuming all of the financial and legal responsibility.

What Lawsuit?

"A single lawsuit for a small business in the U.S averages $3,000 to $150,000."

In today's world, unfortunately, anyone can sue anyone for anything. Just Google "ridiculous lawsuits" and the silly results are only funny to people who don't own a small business.

A single lawsuit for a small business in the U.S. averages $3,000 to $150,000.

According to a report published by the U.S. Chamber of Commerce, 43% of small business owners have been involved in or threatened with a civil lawsuit.

Plus, the laws in California allow property and homeowners to file a lawsuit on a repair or construction job up to 2 years, even as late as 10 years, after a job is completed,

depending on statutes of limitation.

So, for example, let's say a contractor does a good job, but then years later something like this happens:

A product you installed malfunctions due to a manufacturer error and property damage results.

A property you worked on is sold to a different owner, who’s not a loyal customer, and the new owner files a legal complaint about a job you once did.

You promise to fix anything that goes wrong, but something happens that isn’t a simple fix and the customer doesn't give you the chance to fix it.

Some other fluke happens that's not under your control and couldn't possibly be predicted.

Legally, you as the contractor can be held financially responsible for these types of issues, even years after your job is done, whether the complaint is valid or not.

How General Liability Helps

"You can be protected with 1 million dollars (or more) in coverage, for up to 10 years after your jobs are completed."

What General Liability insurance does is safeguard your business and finances against the most common and critical liabilities that come up in the course of doing business.

As long as you have the right General Liability policy, you can be protected by an Insurance Company with 1 million dollars (or more) in coverage, for up to 10 years after your job is completed.

It is smart business practice to protect your company now and into the future, so your finances always remain secure.

General Liability insurance is your protection.

2. Protect Your Business and Customers >

3. Get More and Better Paying Jobs >

4. Because its the Law >

Get More and Better-Paying Customers

"The best-paying jobs for contractors require General Liability insurance."

Whether it’s the better-paying individual customers in your local area, or work in a neighborhood with an HOA (Home Owners Association), or jobs for a corporation, franchise, school or municipality, most will only accept bids from contractors who have General Liability insurance.

Why?

Because in today’s business world, customers expect business owners to be properly insured.

This is especially true in the contracting industry where there’s greater risk of damage and injury, compared to white-collar industries (apparently pens and paper aren’t as dangerous as hammers and soldering guns, or so they say).

To compete in today’s crowded marketplace, you need an edge over the competition. The quality of your product is key. Good customer relations is a must. But, even with all of this going for you, you won’t even get your foot in the door to bid on the bigger jobs, unless you have the correct insurance. Even as a subcontractor, general contractors won't hire you for the big jobs unless you have the right insurance.

These days, all the higher-paying jobs require General Liability.

Be Competitive in the Modern Marketplace

"As a business owner, its valuable to understand how the modern-day consumer shops and buys."

Because of the internet, today the contracting world is rapidly changing.

The internet has already completely transformed the way other industries do business and now it’s hard at work evolving the contracting industry too.

In recent years, technology giants the likes of Amazon and Google invested millions of dollars into new websites that specialize in referring home and property owners to contractors in their local area. While contractor referral sites, such as Angie’s List, have been around since the late-1990s, what’s happening now is different and a revolution that’s fast reshaping how homeowners find and hire contractors.

HomeAdvisor.com now runs almost 9,000 advertisements every month, primetime on channels from CBS to ESPN, CNN and the Food Network, telling home owners to hire contractors through their website. Similar sites like Thumbtack.com, Handy.com, Pro.com, Contractors.com, and dozens of others are fast becoming the modern way for consumers to locate and decide what professional to hire.

This trend makes sense if one considers the Millennial generation - who have grown up with the internet their entire adult lives - are now in their late-20s and early-30s, buying their first homes, starting new businesses and hiring tons of contractors in the process.

As a business owner, it is valuable to understand how this modern-day consumer shops and buys.

"For the first time ever, starting in 2016, consumers began making more purchases on-line than through brick-and-mortar stores."

Before they buy, today's consumer goes online to research their choices and see what other people say about the product or service they're interested in (customer reviews). For restaurants, they check sites like Yelp! To decide on what movie to see, they look up scores on Rotten Tomatoes.

More and more, purchasing is also happening online. While Blockbuster Video and Tower Records are distant memories in the music and home entertainment industries and Macy’s and Nordstroms stores are shutting down stores in retail, on-line purchases are expanding across the boards in every industry. For the first time ever, starting in 2016, consumers began making more purchases on-line than through traditional brick-and-mortar stores.

The contracting industry is headed the exact same way.

Right now there are countless homeowners in your local area searching on-line for contractors. To be expand your business into the future, you should build up your on-line presence to compete. This isn't hard to do. You don't need to be a computer wiz. There are many on-line resources that promote contractors, including some that don't charge upfront fees.

If you do decide to use one of the newer referral websites, be aware that every one of them requires or encourages contractors to have General Liability insurance. After all, today's consumer has unlimited choices on where to spend their money. Consumers want certainty. So, it's no surprise more homeowners now insist on only doing business with licensed, bonded and insured contractors.

Click here to find the right insurance that can open up doors to more and higher-paying customers for your business.

Click here for a list of contractor referral websites you can check out to promote your business on-line.

The Law

"As part of any bid or contract, contractors must disclose in writing to their clients whether or not they have General Liability insurance."

- California Business & Professions Code

Many contractors aren’t familiar with the law on General Liability insurance.

No, General Liability isn’t yet required by law in California, like Worker’s Comp is.

What the Contractor’s State License Board says is its highly recommended for contractors to carry General Liability.

The actual law is, per the California Business & Professions Code (7159.3): as part of any bid or contract, contractors must disclose in writing to their clients whether or not they have General Liability insurance.

How many uninsured contractors unknowingly ignore this law and do not write down in their bids and contracts if they do or don’t have General Liability insurance – who knows?

What’s certain is the chances of a customer hiring a contractor who expressly states they’re uninsured will be much less than a customer hiring a contractor who has General Liability, so their property is adequately protected.

After all, what type of customer is going to pay for a bid that states their project isn’t insured?

Probably not the kind of customers who will pay you enough, so you can easily profit while also affording the basic costs of doing business, including insurance.

So, while state law may not require General Liability yet, it sure does make it harder for someone who's uninsured to compete with contractors who do have proper insurance. Basic insurance needn't cost an arm and a leg. Though not having insurance can cost a business quite a lot in terms of the lost income opportunities that will happen if one isn't insured.

Click here to find out the rates for a basic General Liability policy.

5. For Personal Peace of Mind >

Personal Peace of Mind

"What is the value of peace of mind? That's the value of General Liability insurance."

As a business owner, where your attention should be is on running and growing your business, becoming more successful and stable financially.

Growing a business requires seeking out and pursuing "good risks", while simultaneously avoiding and preventing "bad risks".

There are in facts 2 types of risk in business - good and bad.

"Good" Risk vs. "Bad" Risk

A "good risk" is calculated. It's an opportunity or strategy that can potentially benefit and grow your business.

A "bad risk" is a liability or danger, which if ignored, can threaten or potentially put you out of business.

Not having insurance is a "bad risk". Beyond leaving a business vulnerable, a "bad risk" pulls attention away from finding, assessing and taking the "good risks" a business needs in order to expand.

Trying to make enough money or figuring out how to make more money in today's market can be stressful enough. You don't need the added stress or risk of working without a safety net too.

General Liability takes the “worst cases”, “what ifs” and bad risks off your plate, so you can focus more of your attention and energy on pursuing and capitalizing on good risks.

Insurance provides peace of mind, so no matter what happens, you know the business you're building and your livelihood are financially protected into the future.

Who Else is Insured?

A majority of contractors decide to get insured, not just for themselves, but for their family and employees who depend on the success and stability of the business.

What is the value of knowing your business is safeguarded to support the people who rely on you most?

What is the value of yours and others' peace of mind?

That's the value of General Liability.

General Liability is insurance for you, your family, your employees and your customers.

Get General Liability