Starting a contracting business is exciting, but the first 90 days can also bring significant risks. New contractors are often focused on finding customers, completing their first projects, hiring workers, and purchasing equipment. Insurance may seem like another administrative task, but the right coverage can protect the business from a costly setback.
For contractors just getting started, insurance for new contractors should be viewed as part of the business foundation, not something to address after a claim occurs. Here’s a practical first-90-days coverage plan to help new contractors understand what to consider.
Days 1-30: Establish Your Core Coverage
The first month should focus on identifying the risks your business faces and putting essential coverage in place.
General Liability Insurance
General liability insurance is often one of the first policies a contractor needs. It can help protect against covered third-party claims involving bodily injury, property damage, and certain personal and advertising injuries.
For example, if a contractor accidentally damages a customer’s property while working, a covered liability policy may respond to the resulting claim.
Many project owners and general contractors also require specific liability limits before allowing a contractor to begin work.
Workers’ Compensation
If you have employees, workers’ compensation requirements should be addressed early. California generally requires employers to carry workers’ compensation insurance, even with only one employee.
Coverage can help address medical expenses and other benefits associated with covered workplace injuries.
New contractors should understand their responsibilities before bringing employees onto a jobsite.
Commercial Auto Insurance
If your business owns or uses vehicles for work, personal auto insurance may not provide the protection your business needs. Contractors who use pickup trucks, vans, or other vehicles for business purposes should evaluate commercial auto coverage.
This is particularly important when vehicles transport tools, materials, equipment, or employees.
Days 31-60: Match Coverage to Your Trade
Once your basic policies are in place, the next step is to identify exposures specific to your contracting business.
A plumber, roofer, electrician, HVAC contractor, and general contractor don’t necessarily face the same risks.
Consider whether your business needs:
- Tools and equipment coverage
- Inland marine insurance
- Contractor equipment insurance
- Professional liability insurance
- Pollution liability coverage
- Umbrella liability insurance
For example, contractors regularly transporting tools and equipment between jobsites may need protection that goes beyond a standard general liability policy.
Review Your Contracts
During this period, review the insurance requirements in your customer and general contractor agreements.
Contracts may require:
- Specific liability limits
- Additional insured status
- Waivers of subrogation
- Primary and non-contributory coverage
- Completed operations coverage
- Certificates of insurance
Don’t assume that a standard policy automatically satisfies every project requirement. Insurance endorsements may need to be specifically added to your policy.
Days 61-90: Strengthen Your Risk Management
By the third month, you should have a clearer understanding of your operations, employees, vehicles, equipment, and projects.
Use this information to identify potential gaps.
Review Your Claims and Near-Misses
Even if you haven’t had a formal insurance claim, document accidents, property damage, vehicle incidents, and other near-misses.
This information can help you identify patterns before they become expensive losses.
Establish Safety Procedures
A written safety program can help create consistent expectations for employees and subcontractors.
Depending on your trade, procedures may address:
- Fall protection
- Equipment operation
- Vehicle safety
- Jobsite inspections
- Personal protective equipment
- Accident reporting
Strong risk management can complement your insurance program and help reduce the frequency and severity of claims.
Review Subcontractor Insurance
If you hire subcontractors, don’t simply assume they are adequately insured.
Request current certificates of insurance and verify that their coverage meets your contractual requirements. Depending on the project, you may also need specific endorsements or contractual protections.
A Simple 90-Day Insurance Checklist
New contractors can use this timeline as a starting point:
First 30 days
- Identify business risks
- Purchase general liability coverage
- Address workers’ compensation requirements
- Review commercial auto needs
- Establish basic safety procedures
Days 31-60
- Review contracts
- Identify trade-specific coverage
- Insure tools and equipment
- Check project-specific insurance requirements
- Review subcontractor coverage
Days 61-90
- Review claims and incidents
- Update employee and vehicle information
- Evaluate coverage limits
- Identify insurance gaps
- Schedule a policy review with your insurance professional
Search Query New Contractors Often Ask
A common search question is: “What insurance does a new contractor need?”
The answer depends on the contractor’s trade, employees, vehicles, equipment, contracts, and project requirements. There is no universal insurance package that fits every new contracting business.
That’s why reviewing your operations with an experienced insurance professional can be more useful than simply choosing the cheapest policy.
Don’t Wait Until Your First Claim
The first 90 days are an opportunity to establish good insurance and risk management habits before your business becomes more complicated.
At Artisan Insurance Solutions, we help contractors evaluate their risks and identify coverage options designed around their business operations. Whether you’re launching your first contracting company or expanding into new types of projects, having the right insurance strategy can help you move forward with greater confidence.
Contact us today to review your coverage needs and build an insurance plan for your contracting business.
Call us at (909) 275-7557 to speak with an insurance professional.
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Frequently Asked Questions (FAQs)
What insurance does a new contractor need?
Requirements vary by business, but common coverage considerations include general liability, workers’ compensation, commercial auto, and tools or equipment coverage.
Is general liability insurance required for contractors in California?
California may require contractors to maintain specific liability coverage as part of licensing requirements. Requirements can vary, so contractors should check current CSLB rules.
When should a new contractor buy insurance?
Ideally, coverage should be arranged before beginning operations or starting a project that requires proof of insurance.
Does a new contractor need commercial auto insurance?
If vehicles are owned, leased, or used for business purposes, commercial auto coverage may be appropriate. The correct coverage depends on how the vehicles are used and titled.
References
For additional information about contractor licensing, workplace safety, and insurance requirements, consult these official resources:
- California Contractors State License Board (CSLB): https://www.cslb.ca.gov/
- California Department of Insurance: https://www.insurance.ca.gov/
- California Department of Industrial Relations: https://www.dir.ca.gov/
- Occupational Safety and Health Administration (OSHA): https://www.osha.gov/
- U.S. Small Business Administration (SBA): https://www.sba.gov/
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