What Happens If a Contractor Works Without Insurance? 

Working as a contractor can offer lucrative and rewarding benefits. However, whether you’re a general contractor overseeing larger projects or an independent professional providing specialized services, this sector consistently requires you to account for significant risks and exposures. The construction industry is among the most dangerous of all U.S. employers, meaning that failing to maintain appropriate insurance could amount to catastrophic consequences.

3 Consequences of Lacking Contractors Insurance

Contractors may need various types of insurance. Although exact coverage needs may vary depending on the size of your operation and the services you offer, you should retain appropriate policies to avoid the following repercussions:

• Lower financial security—Offering financial aid in the aftermath of various incidents is a core function of insurance. If a fire breaks out at a job site and destroys your equipment or your employees make a mistake that causes someone else’s injuries or property damage, insurance can offset resulting losses. But without appropriate coverage, you’d potentially have to pay for such expenses out of pocket.

• Legal noncompliance—Contractors may be beholden to various laws and regulations when it comes to insurance. For example, general contractors are legally mandated to carry general liability insurance in Georgia. Additionally, if you use cars, vans, trucks or other motor vehicles for your contracting business, you’ll be required to have commercial auto coverage. Failing to adhere to these obligations could impose significant consequences, including fines, revoked licenses and orders to shut down operations.

• Failure to fulfill client requirements—Beyond official laws, you may need to satisfy clients’ insurance-related mandates to qualify for specific jobs and contracts. For instance, many prospects may refuse to work with you unless you carry professional liability insurance or surety bonds. This means that without appropriate insurance, you could be hamstringing your business’s potential and missing out on key opportunities.

We’re Here to Help

Contact First Priority Insurance Agency in Morrow, Georgia, today to learn more about contractors insurance and its importance.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.