Project insurance 101

contractor and subcontractors

As a contractor or handyman, you know that every project is different. Every bathroom in disrepair, every kitchen that needs a remodel, and every construction project is invariably unique. From the strange piping job the homeowner manually installed 18 years ago to the overly-particular clients, there’s always something that separates one project from another. 

We feel the same about insurance—there is no true ‘one size fits all’ solution. And when it comes to project insurance, we understand that you need a policy that caters to the specific job or project at hand.

To that end, what is project-based insurance? Who needs it? And what are the various types of project insurance? Let’s jump in.

Project liability insurance defined

Project insurance is the overarching term of many different handyman and contractor insurances. This term can encompass various forms of insurance. However, each one is a short-term, project-specific policy that extends from the start of the work to the date of completion. As such, the insurance policy can cover you for as little as a few hours, for a quick installation project, or as long as you need, for bigger renovation and construction projects. 

So, if you get hired to refloor a bedroom one week and a garage repair next month, you might consider two different project policies to ensure you’re covered for each job (and saving your money in the meantime).

While project insurance doesn’t quite go into the specific details of the particular job (meaning it wouldn’t typically differentiate between reflooring and garage repair), it does protect you from claims common to both. These include:

  • Third-party property damage
  • Third-party injury
  • Third-party medical expenses
  • Legal fees

Before diving into the specific policies and types of coverage you can choose from, let’s first ensure that you do, in fact, need project insurance.

Who needs project insurance?

Both established small businesses and self-employed independent workers need to be protected from the inherent risks associated with general contractor and handyman work. That’s why insurance, as a whole, is recommended for every working individual. At the end of the day, it’s risk management.

However, who specifically needs project insurance? 

Consider, first, the handyman who is just starting out. They may have decided to create a business after years of being the “go-to neighbor” when any remodel, repairs, or reconstruction was needed. For this person, insurance seems like the last thing on their mind, but in reality, they’re the most vulnerable.

As soon as you start accepting payment for your handyman or contractor services, you’re a business—and small businesses are sued, or threatened with a lawsuit, more often than you might imagine:

  • 43% of small business owners have been threatened with or involved in a lawsuit, according to polling done by Penn Schoen Berland and Public Opinion Strategies1
  • $54,000–$91,000 is the average cost of business lawsuits that regard contract disputes, liability suits, and similar cases, according to court statistics2

Having insurance can be a costly expenditure, especially when starting your business with just a few recurring clients. For this reason, handymen and contractors might work gigs only a few times per month. In this case, project insurance that protects you during these times is invaluable.

Similarly—on the opposite side of the business spectrum—for established contractor businesses who have worked in the industry for decades, project insurance also seems enticing. Why? As you gain more experience, you get hired for larger and longer-lasting projects, projects that tap into your deep well of knowledge and expertise.

These established businesses might also only have a couple gigs per month, but each gig stretches for weeks. In this case, it’s similarly beneficial to have insurance per each work opportunity.

While both established and blossoming businesses can utilize project insurance to cover them for short-term gigs, who is more likely to use it? And for what types of projects?

Handymen and the one-off projects

Because handymen are called on for most tasks under the sun (and under the roof), they are the ones using project insurance most frequently. These one-off projects range across all different fields, including but not limited to:

Flooring projects

Whether it’s your specialty or just part of your general contracting, this can include: 

  • Installation (hardwood, tile, carpet)
  • Repair (hardwood, tile, carpet)
  • Refinishing the floors

Building and installation 

From building furniture from a box to clients who need that professional installation expertise, handymen are called on for:

  • Furniture assembly
  • Furniture rearrangement
  • Installing home theaters
  • Installing sound system throughout the home
  • Running conduits and hiding wires 

Redesigning a home’s interior

Handymen often lend an extra set of hands for (or take over completely) interior projects, including:

  • Removal or installation of wallpaper
  • Fixing and working with drywall
  • Painting or trim work
  • Building and/or installing closets, shelves, bookcases, etc.

Kitchen and bathroom upgrades

For typical kitchen projects, local handymen are needed for:

  • Repairing and/or installing countertops
  • Repairing, refacing, and/or installing cabinets
  • Installing a kitchen island
  • Installing medicine cabinets
  • Fixing a leaky faucet

Heating, air conditioning, and ventilation

Live in a place where the seasons change? Handymen can also be called in for:

  • Repairing air conditioning, heating, or ventilation systems
  • Installing air conditioning, heating, or ventilation systems
  • Cleaning or replacing filters
  • Deep clean of the vents

Non-electrician specific projects

For projects that don’t involve the home’s interior wiring system, handymen can help with: 

  • Installing or removing ceiling fans
  • Installing or removing light switches or outlets
  • Working on basic appliances (refrigerator, dishwasher, oven, etc.)

Pipe work that doesn’t require a plumber

For installation and repair jobs that don’t require the help of a certified plumber, handymen can help with:

  • Toilet repair (including clogs, constant flushing, tank adjustments, etc.)
  • Fixing a blocked or clogged drain
  • Shower and/or sink faucet install, repair, or removal
  • Garbage disposal work (repair, installation, removal)

Working in the yard

Handymen are often called on for one-off projects around the home, including:

  • Building a shed for equipment storage
  • Installing a deck
  • Building outdoor furniture
  • Installing, repairs, or painting a fence
  • Lawn mowing, hedges trimming, and various garden projects
  • Installing walkways (stone, wood, padded dirt, etc.)

Every task on this list is another risk and another reason why a handyman or contractor needs insurance. But in  these instances, it doesn’t make sense to lock in a long-term, annual insurance policy, because the projects are sporadic. 

That’s where short term, project insurance comes in.

Different types of project-based insurance coverage

Insurers will (typically) fit project-based insurance under their existing policies. For example, you might find one of these policies acting as project insurance:

General liability insurance – A general liability policy or CGL policy, is probably the most common form of project liability insurance that’s readily available. It’s also the most fundamental insurance any business wants in their arsenal. Why? General liability insurance protects you and your business against the inherent risks related to your services. Accidents that involve bodily injury or property damage to a third party are covered, as well as any ensuing medical expenses and legal defense fees.

Contractors’ all risks insurance – CAR insurance (not to be confused with car insurance) protects contractors against property damage, third-party injuries, and subcontractor injuries. These policies may be taken out during a large construction project where both the individual contractor and the employer will file jointly. This means either party can make a claim to the insurer, should third-party property damage or injury occur.

CAR insurance (usually) covers unforeseen damage, including:

  • Earthquakes and wind damage
  • Floods and water damage
  • Mold
  • Construction faults and negligence

On the other hand, CAR insurance will not cover:

  • Normal wear and tear after the project is complete 
  • Poor workmanship damage
  • Willful negligence (not taking proper care)

Profession-specific insurance – Profession-specific insurance are policies that are perfect for those in professions that work with their hands. If you’re a handyman, a general contractor, a carpenter, or someone who focuses on flooring (or kitchen repair or garage door installations, etc.), there are profession-specific policies that can act as project insurance. 

The key is to find a liability insurance policy that fits both your business’ needs, your work schedule, and covers you while you’re working on a project—yet doesn’t drain your bank account.

Thimble’s on-demand, flexible insurance

Although short term, project-based insurance is desirable, most insurers don’t offer a direct policy called “project insurance.” And fewer offer a short-term liability policy. That’s where Thimble is changing the game.  

We think project insurance should be coverage that’s flexible enough to only cover you when you actually need it. 

Traditionally, insurance companies made contractors and handymen lock into long-term, high-cost policies. Which meant if they switched projects or their project ended, they may incur additional costs. When asked for more flexibility, insurers would say “that’s the rules.”

As for rules, Thimble says they’re meant to be broken. We know the industry is riddled with complex topics that people don’t understand and policies that end up costing hard-working people more than their fair share.

Our general liability insurance policy works for the handymen and contractors who need flexible, on-demand insurance for their projects. Starting at just $5, you can cover your budding business, and as you grow, your insurance scales with you.

And, with Thimble, you can easily add crew and Additional Insureds to your policy. 

The risks of your business are inherent; you need to be protected while you’re working on a project. Thimble helps those who work on a project-by-project basis get the coverage they need.

That way, you can rest assured that, when a project comes in you’ll have coverage. And when there’s not, you won’t be wasting money. 

 

Sources:

Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.

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DISCLAIMER: The information contained on this page is intended to provide general information only. For specific legal advice, please contact an attorney. For advice regarding your particular insurance needs, you should speak with your broker or agent to ensure that you have the appropriate coverages and limits.