Carpenter’s Insurance: Who Needs It & Why

Insurance is one part of a strategy that may help carpenters keep their businesses in good financial standing. 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 major loss, a comprehensive insurance portfolio offers protection for your business.

What is carpenter insurance?

A carpenter's insurance policy may help protect your business if accidents, injuries, or illnesses occur in a work-related capacity. Policies like workers’ compensation extend protection if an employee gets hurt on a job, and a commercial auto policy protects you if one of your company trucks collides with another vehicle or structure.

There are many insurance policies that are relevant to carpenters, 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. 

Let's say you're 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 specialty contractor walking below. That contractor's injuries may be minor but they are in need of medical treatment. A general liability insurance policy may help cover the costs of those medical services. 

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 should a carpenter have?

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. Below is a list of policies that may be beneficial for a carpenter to add to their portfolio: 

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.  

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. 

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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. A licensed insurance professional can help you determine which types of insurance policies are suitable for your business needs and may recommend policies based on any coverage gaps they discover.

Once you submit the necessary documentation to your insurance representative agent, this, and your application, is reviewed by an underwriter. If approved for the policy, you may 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: 

Scope of coverage: The more coverage you elect to have, the higher your insurance costs may be. Be sure that you select policies that are critical to your specific needs.

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 may 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 regularly, it's possible that these risks are factored into your premium. Insurance companies look at historical statistics to determine how likely your business is to incur a claim and may determine costs based on this.

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?

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

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 may also be easier as you can provide valid proof of insurance to an owner or general contractor. 

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 an insurance agent or broker.

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