In case of contractors and those who are involved in construction businesses, general liability insurance policy covers the cost of lawsuits which are filed by third-parties over bodily damage or property injury caused by their business or any of their employees.

It means, if your construction business is sued, you would have to pay legal fees, damages and settlement costs, regardless of whether you’re found liable or not. A general liability insurance (also called contractor’s liability insurance) can help by safeguarding contractor or any other person who is involved in a construction business by covering the cost of a lawsuit filed against them if any. A general liability insurance company would also give compensation to the third-party on your behalf. In case the injured party incurs any medical expenditure as well, your general liability insurance company will cover that as well.

It is essential to note, general liability insurance would not cover every lawsuit, but it would help by covering most of the common and costly lawsuits. As per your business requirement, you can expand your general liability cover and includes vendor endorsement, oral & written contractual liability, damages to premises rented to you, etc.; by paying an additional premium.

Usually, general liability insurance offers cover for contractors with respect to third-party lawsuits over-

  • Damages caused to property
  • Third-party and client injuries, for instance, your client trips over a wet floor in your office or falls over a power cord and breaks his leg
  • Reputational injuries, for instance your competitor alleges that you have tarnished their reputation through your advertisement.
  • Problems arise due to your construction activity or installation of products

Further, there are some instances when general liability insurance will not offer coverage. In case of intended injury, war, personal and advertising injury, etc.; you will not get any coverage under general liability insurance policy.

Read more: What is a Commercial General Liability Insurance?

Irrespective of what type of construction or installation business you are running, general liability insurance can safeguard you from various lawsuits which may happen due to the work you complete. Remember, general liability insurance policy is something which you should purchase as it covers many of your company’s biggest risks and thus, secure you from lawsuits and hefty compensation that could otherwise disrupt your business.

Case 

Since 2012, K.S Air Conditioner has made a name for itself in the electronics industry. The company has a team of expert professionals who has so far completed every project successfully. Though the company always abide by strict professional norms; it has also purchased a general liability insurance to get coverage in case something goes wrong. Last year, the company got a contract for installing ten air conditioners in K.K School.

The company sent its team to the site which installed all the air-conditioners. Though eight air conditioners were installed in a right way; there were some issues in two air conditioners which were installed in the computer room. The coolant pipe was constricted, which caused a buildup of condensation and frost as well. Here, the moisture started to rot the floors of the room.

In this situation, the school filed a case against K.S Air Conditioner for failure to deliver what it was promised. Here, the lawsuit was filed for damages which were related to repair costs, rotted floors and other financial losses.

Read more: What are the different types of liability insurance?

In this case, as K.S Air Conditioner had a general liability insurance policy, the company approached the insurer for the claim settlement. The insurer appointed a surveyor who came to do a site inspection and found that the losses happened due to the wrong installation of the air conditioner and therefore, the claim was genuine. Here, the insurer agreed to settle the claim of K.S Air Conditioner. The insurer paid the cost of the lawsuit along with the damages which the court asked K.S Air Conditioner to pay to the school.

Without general liability insurance policy, it would have been a major financial loss for K.S Air Conditioner who would have to pay compensation from its pocket otherwise.