Carpenter's insurance two hands looking at document with tape measure

Insurance is one part of a strategy to keep your carpentry business financially healthy. You can practice safety and use common sense on the job, but there’s no way to predict when accidents or injuries might occur. To minimize any financial damage, a comprehensive carpenter’s insurance plan is a smart bet. 

What is carpenter insurance?

Carpenter’s insurance is a financial instrument that helps protect your business if accidents, injuries, or illnesses occur in a work-related capacity. For protection from financial consequences that could be small or large, you pay a premium to an insurance company for policies that cover many unexpected situations. 

There are many policies that apply to a carpenter, but a simple business owner’s policy can include property damage and liability coverage. If you break a window in a customer’s home, property damage coverage helps pay the cost of repair. If a third party gets injured on a job, liability coverage helps pay the cost of legal defense if you get sued for the accident. 

Does a carpenter need insurance?

Carpentry is a diverse occupation. During daily operations, any number of accidents could happen on a project. A large claim against your business could have a devastating financial effect that could threaten your livelihood. Having carpenter’s insurance is an affordable way to protect against these potential issues. 

To illustrate the need for insurance, you (or an employee) could be nailing a stud in place on the second floor of a new home. The board slips from your grip and strikes the employee of another sub walking below. Injuries are minor but the person needs medical treatment, and your carpenter’s liability insurance will help cover the costs of those medical services. 

Insurance serves another purpose. Without an adequate subcontractor insurance plan, you may not be able to land work with a general contractor (GC) or owner. The parties who hire you will want to know that you, and they, are protected in case something goes awry on the job. 

What insurance does a carpentry contractor need?   

A carpenter’s business owner policy is a good foundation, but you’ll want to explore other policy options that may apply to your business. Here’s a partial list: 

Commercial auto insurance: You may operate trucks or vans, and commercial auto coverage enters the mix if you get in an accident with another vehicle or damage a fence on a job.

Inland marine insurance: This coverage protects tools, equipment, or building materials while they are stored on the job, at your business location, or anywhere in transit. 

General liability insurance: General liability insurance protects contractors in situations where someone claims the contractor’s work led to bodily injury or property damage. An owner or GC may want you to have this in case you cause an accident or injury on a project. And while it’s not a legal requirement in most cases, in some states it may be required to get licensed.

Professional liability insurance: You may need this coverage if you perform design or consulting services that involve the sale of drawings or blueprints. 

Surety bonds: Surety bonds pay out to an owner or GC if you are not able to perform your work per the terms of a construction contract. 

Workers’ compensation insurance: If you have employees, a workers’ compensation policy helps them replace lost income and pay for medical treatment if they are injured or fall ill due to job-related conditions. 

Cyber liability insurance: This helps cover the cost of recovery or restoration of electronic records if computers or mobile devices are hacked or destroyed. 

How do I get carpenter’s insurance?

In most cases, the insurance application process requires basic information about your business. You should be prepared to provide information that includes payroll data, annual revenue figures, and a history of prior insurance claims, if any. 

To obtain carpenter’s insurance, you’ll need to contact an agent or broker. You can begin the application process in person at the agent’s office or online applications are also another possibility.

After you give the agent or broker all the necessary information, the application is reviewed by an underwriter. If approved for the policy, you’ll need to remit a down payment to bind the contract, and then you’ll be covered as of the effective date. 

How much does carpenter’s insurance cost?

The cost of carpenter’s insurance varies based on many factors. Some of these factors include: 

The amount of coverage: To meet the terms of a contract,  GCs or owners usually want to see a general liability amount of $2 million. If you choose more coverage, the cost of the general liability coverage will increase. This rule also applies to coverage for business property and vehicles. 

Annual revenue: The more work you do, the more money you can expect to pay for carpenter’s insurance. If you have a large operation that takes in $2 million annually, premiums will be higher for you than a company whose revenue is $500,000. 

Your geographic location: If you perform work in an area that experiences weather events like hurricanes or flooding, the strong probability that you’ll incur a claim is factored into your premium. Insurance companies look at historical statistics to determine how likely your business is to incur a claim. 

Insurance expenses for carpenters will also depend on the type of work you do. Carpenters should clearly define their scope of operations. If you have a shop where you’re making custom woodwork, that pursuit classifies differently from a framer — or a carpenter who does both. 

A carpenter can perform a lot of different functions so they need to include all duties in their work description. This helps the insurance carrier to rate the policy properly and ensure coverage applies if a claim does occur.

What other insurance policies can be bundled with subcontractor insurance?

The most commonly “bundled” carpenter’s policy is the business owner’s plan. It includes general liability insurance and business property damage coverages. Often, you can amend this core package to include higher coverage amounts for high-value equipment or endorsements like basic cyber insurance. Commercial auto and workers comp policies must stand on their own, however. 

Purchasing carpenter’s insurance does not have to be a complicated endeavor, and the protection you gain will give you and other parties some measure of security. Getting work will also be easier when you can provide valid proof of insurance to an owner or GC. 

Nail down your insurance coverage

Carpenter’s insurance can help create a solid financial foundation for your business. If accidents or injuries occur on the job, these policies protect you from associated costs that could cut deeply into your bottom line. There are various policies that address different parts of your operation, and it’s easy to start and maintain a comprehensive insurance plan through any agent or broker.

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