What Happens If a Contractor Works Without Insurance

Contractors can face many challenges when working on projects. While each project has varying levels of risk, one thing that is typically true about all projects is that they can benefit from having insurance as a financial safety net.

Types of Insurance for Contractors

Contractors may consider the following types of coverage, among others:

• General liability insurance

• Workers’ compensation insurance

• Builders risk insurance

• Commercial auto insurance

• Tools and equipment insurance

• Professional liability insurance

Importance of Insurance for Contractors

If a contractor works without insurance, they may face the following repercussions:

• Legal issues—Some insurance policies, such as workers’ compensation and commercial auto insurance, are legally required. Failure to adhere to these requirements could lead to fines and other legal penalties.

• Business foreclosure—Insurance can offer a financial safety net; without it, a contractor would be responsible for any losses involving your property or third-party damages out of pocket. This could be financially significant enough to force your business into bankruptcy.

• Reputational damage—If you lack insurance and are found at fault for an accident, it may be challenging to preserve relationships with the affected parties, and they may spread the word to potential clients.

• Loss of credibility—Customers and clients may refuse to work with you if you lack sufficient insurance coverage.

Learn More

For contractors insurance near you, contact Sunstar Insurance of Arkansas.

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.