Carpenter Insurance

The type of carpentry work you do and the laws in your specific state will determine the requirements for licenses, permits, and bonds you need. There are specific instances when your carpentry business can benefit from obtaining the right licenses, bonds, and permits, such as:

• Taking on certain types of work. You may need a license to do specific tasks, including carpentry and/or electrical work. These requirements differ by state.
• Accepting large-scale or particular projects. You might need a permit for a specific project. Such as, building a structure of a certain height, or converting one type of room into another, could require a permit. Again, this depends on your state laws.
• Securing contracts. Several types of surety bonds are common in construction, including bid bonds, performance bonds, and payment bonds. They act as a guarantee you'll fulfill the terms of a contract. You may need one to bid on a project, apply for a license, or work with a specific client.

Because of this, your insurance needs will most likely be determined by licenses, permits, and bonds. For example, most general contractors need to buy commercial general liability insurance to apply for licensure in their state.

While general liability insurance, sometimes called public liability, and workers' compensation provide crucial protection against workplace injuries and third-party claims, they don't cover every risk. Carpenters should also consider the following insurance products:

• Commercial property insurance covers your building and its contents, such as tools, computers, and furnishings. It protects against financial losses from fires, storms, and burglaries.
• Business personal property (BPP) coverage can be added to your general liability policy to protect business property kept at a designated location, though you may not have a building.
• Inland marine insurance provides coverage for your carpentry business items while they're in transit or at a jobsite. This is because a standard commercial property policy only covers items at your business address. Some types of inland marine coverages include contractor's tools and equipment insurance and installation floater insurance for materials awaiting installation.
• Commercial umbrella insurance activates to provide additional coverage when your underlying general liability, commercial auto, or employer's liability policy reaches the limit on a claim.
• Cyber insurance, also called cybersecurity insurance, protects carpenters from the high costs of a data breach or malicious software attack. It covers expenses such as customer notification, credit monitoring, legal fees, and fines.

Buying short-term, temporary policies like carpenter liability insurance by the hour or on a daily basis seem like a good idea. However, there are several reasons and benefits for maintaining continuous coverage:

• Avoiding rate increases. If you cancel a policy, your insurer might be unwilling to sell you another policy, or decide to charge more for the same coverage.
• Coverage remains active. Claims-made policies, such as professional liability insurance, only cover claims made while the policy is active. If you're sued for a completed project after you've canceled coverage, you won't be covered, even if you were insured while you did the work.
• You maintain your license. Some professional licenses require insurance, which means you're at risk of losing your license if you cancel your policy. It might be difficult or even impossible to get the license back, depending on the circumstances.

Remember, you're responsible for any business-related losses while you don't have commercial insurance. That includes:

• Work-related auto accidents, which are only covered by a commercial auto policy or hired and non-owned auto (HNOA) insurance for vehicles used by your business but not owned by it. In most cases, a personal auto policy will only cover your daily commute.
• Work-related medical expenses usually won't be covered under a personal health insurance policy, which is why you need workers' compensation insurance. It's also required by law in most states.
• Accidents and damages at your home that involve your business clients or property are usually only covered by general liability insurance, commercial property insurance, or the two together in a business owner's policy (BOP). A homeowner's policy only provides coverage for personal items.