Liability Insurance for New Jersey NJ Contractors
This is a brief explanation of liability insurance pertaining to contractors. It is a summary and is not a replacement for the policy. The policy gives full details, please read the policy.
Liability insurance is a contract where the insurance company agrees to pay legal obligations of the insured for…
Someone is injured as a result of actions of the insured (or their employees).
Example: While you are on the job site you accidentally hit the customer on the head with a piece of wood. If they file a lawsuit against you because of their injuries, coverage is provided by the insurance company for defense and settlement (if any).
Example 2: If you are an electrical contractor and someone gets electrocuted because of faulty wiring, coverage is provided.
Damage to a home, commercial building, motor vehicle, etc.
Example: While working on a job and using a torch, you accidentally start a fire; coverage is provided.
Exclusions: (Not covered)
- Aircraft, automobiles, watercraft (no coverage provided for loading or unloading from any auto, aircraft, or watercraft) Coverage is provided by those separate policies.
- Contractual liability
- Liquor liability
- Workers compensation, (injury to employees)
- Pollution caused by your work
- War – nuclear hazards
- Damage to property you own, rent, or borrow
- Damage to your work
- Recall of products (by manufacturer)
- Mobile equipment, (backhoes, cranes, etc.)
- Care, custody, control
- Workmanship: Coverage is NOT provided.
- Professional Liability / Errors & Omissions
Workmanship Example: Your job is to install a toilet. You finish the job and go home. Later that night the homeowners calls you and states the toilet doesn’t work. You have to go back and fix the toilet. No coverage is provided.
Workmanship Example 2: While installing an electrical receptacle in a wall you cut the hole too big. The wall has to be plastered up, wallpaper has to be installed, etc. No coverage is provided.
Care, Custody, Control Example: While installing a chandelier you drop it. There is no coverage to the chandelier.
Other Coverage Provided
Completed Operations: For losses that happen after you have completed your work at a jobsite, protection is provided. There is no time limit, however the occurrence (claim) must occur under the policy period.
Remember, if your policy cancels and you go out of business, NO coverage is provided for the past work you did. Coverage can be provided with a “discontinued operations” policy. Please call this agency for further details.
Who is insured? “You” means the owner, partner, corporate officer, employees.
Completed Operations Example: As an electrical contractor you wired a house on 1/2/97 and had a State Farm policy from 1/1/97 to 12/31/97. Now effective 1/1/98 you cancelled the State Farm policy and took one out through this agency with XYZ Insurance Company. On 2/1/98 you call and tell us that the house you wired for Mr. Smith just had a fire in it due to faulty wiring. Coverage would be provided even though you wired the home under the State Farm policy. The important fact is that the claim or occurrence occurred while insured with XYZ Ins. Co.