“Measure twice, cut once” is an old saying amongst carpenters. However, no one is perfect, and even the best carpenters make mistakes that can cause huge (and possibly unsustainable) financial losses. That’s why general liability insurance for carpenters is critical for your business.
Here is an overview of how general liability insurance works along with the cost and policy limits.
Ideally, every carpenter should have general liability insurance coverage to protect their business.
The primary purpose of general liability insurance is to protect your carpenter business from financial liabilities. You can incur these losses from a range of common mistakes, including:
These risks can result in unsustainable financial losses for your business. Fortunately, general liability insurance absorbs part or all of these losses.
Insurance coverage is one of the main considerations for many people when hiring a contractor. As a result, getting quality insurance coverage can also boost your competitive advantage and help you make more money through client acquisition.
Many federal entities, states, and cities mandate that contractors, such as carpenters, get insurance coverage. Therefore, failure to obtain coverage can result in legal consequences, such as fines and carpentry license suspension.
General liability insurance policies cover common risks for carpenters, such as property damage and bodily injury. Below are the liability coverages.
Cases of property damage are common among contractors, including carpenters. The damages can be extensive and costly. The property owner may decide to sue, resulting in legal costs. General liability insurance may cover these typical fees.
Worksite accidents happen. These accidents can result in life-changing bodily injuries, and victims often sue for compensation. The resulting legal and medical expenses can amount to millions of dollars.
General liability insurance may cover the bulk of these costs. However, you will need workers’ compensation insurance to cover bodily injury to employees.
If you or one of your subcontractors or employees speaks poorly (like making false statements) about a client or another vendor, it can result in expensive lawsuits. General liability insurance helps cover the legal expenses and settlement costs.
Carpenters can also opt to add other items to their general liability insurance policies. Common add-ons include things like cyber protection, data breach coverage, and equipment coverage (ideal for helping cover the cost of repairing or replacing equipment).
Insurers will cover you up to a certain amount (insurance limit).
General liability insurance policies have varying coverage limits. At Pathpoint, we regularly insure carpenter limits up to $1,000,000 per occurrence and $2,000,000 aggregate, but l$2,000,000 per occurrence and $3,000,000 aggregate limits as well as "per project" and "per location" limits up to $5,000,000 may be available by request. You can see other limits we have here.
Your goal is to get a limit high enough to cover your most expensive projects. However, it is also worth noting that extending your limits will raise your monthly premiums. Shop around for affordable insurance for your carpentry trade.
General liability insurance for carpenters is worth every penny for peace of mind as a business owner. At Pathpoint, carpenters typically pay a premium of $650 or more per year. However, prices may vary depending on factors such as:
You can adjust some of your policy’s terms to change its overall cost. Raising your deductible or reducing your limit can result in cheaper monthly premiums.
A certificate of insurance (COI) is an official statement confirming that your carpentry practice is covered by insurance. The one-page statement contains a summary of the insurance policy’s terms, including your business information, the type of coverage, and the policy’s expiration date.
The main purpose of a COI is to serve as proof that you are insured. It also protects all parties involved in a project against potential risk, which is why clients and other vendors may ask to see it.
Experts recommend getting a certificate of insurance as soon as possible. Your insurance agent may issue it after receipt of payment.
Carpenters face a high risk of damage and injury claims that general liability insurance may cover. Liability insurance may settle costs in the following examples.
The physical nature of carpentry along with heavy tool operations often causes accidents. For instance, as you move a wood panel for installation, a slip or stumble causes you to hit a TV set, breaking the screen. Or you drop a heavy tool that cracks the tile floor. Liability insurance covers this damage or the repair costs to restore damaged property.
Third parties might suffer harm at your work site. For example, a client might trip on a saw or sander cord, leading to severe injuries. General liability insurance may cover medical expenses and legal fees if the injured party sues.
Your carpenters' general liability policy should include product and completed insurance coverage. This product liability insurance covers damages from products delivered or work done. For instance, you provide an item of furniture that a customer later claims fell over and hurt them. Your insurance may cover your legal costs and damages that the court awards.
Liability insurance protects against defamation and copyright infringements. Your employee makes untrue statements about a competitor's business. Or in your marketing, you might unknowingly infringe on protected copyright by using a competitor's slogan making you liable for damages.
Besides insurance, carpenters can take other measures to safeguard their businesses. These measures protect your assets, prevent fraud, ensure compliance, and support long-term growth.
Ensure your business is registered correctly and has the appropriate permits. Business licenses vary depending on the type of business and the state or county of operation.
Some states require a permit, while others don't. You can contact the county or city clerk's office to obtain the necessary license to run your business. Also, ensure your compliance is up to date by acquiring licenses for new products.
Contracts are legal agreements between parties that define rights, obligations, and terms and conditions. A signed contract is a defense in disputes with customers, employees, or suppliers.
Before engaging in any work for a client, ensure you have signed an enforceable contract that stipulates the scope, deliverables, deadlines, and payment terms. It protects your rights by ensuring timely payment and provides for legal action in case the other party breaches the terms.
Setting internal processes and controls will improve operating efficiency, minimize fraud, and ensure regulatory compliance. The following policies and procedures mitigate operational and financial risks.
Separation of critical duties: Allocate custodial, authorization, and record-keeping tasks to different employees to ensure that no one has complete control over a transaction. For example, an employee should not be responsible for authorization of the release of materials.
System and information access controls: Different employees should have various levels of access to business information. Restrict access to sensitive and proprietary business information such as contracts and intellectual property by setting permission levels.
Also, maintain different levels of access to the accounting system through user accounts and passwords to prevent fraud. Further, bolster your accounting controls by segregating duties in the authorization and approval of financial transactions.
Reviews: Reviews are useful in ensuring compliance and maintaining financial integrity. Incorporate reviews of accounting processes through reconciliations or audits to detect
General liability insurance is essential for carpenters. You can protect the future of your business from financial losses and legal issues. Contact your insurance agent and ask them to get you a Pathpoint instant quote.
