Flooring contractors play an essential role in remodels, repairs and new construction projects for residential and commercial buildings, contributing to the functionality and aesthetic of every room they touch. These contractors typically sell and install numerous floor coverings, including hardwood flooring, laminate, carpet, porcelain and ceramic tile. Due to the nature of their work - namely, manual labor, exposure to environmental contaminants and the risk of property damage - flooring contractors may need specialized coverage to protect against liabilities.
This article discusses the potential exposures flooring contractors may face and common types of construction insurance for them to consider.
It can be challenging to control risks in the construction industry. Here are some of the most common risks flooring contractors may face:
Injuries - Flooring contractors are susceptible to slips on slick surfaces and injuries from carrying various materials, such as tile and carpet. Third parties may also be injured at project sites, especially if the floors are unfinished.
Property damage - Since flooring contractors typically perform work at others' homes and businesses, damage to a client's property can occur both during a project and after its completion.
Auto accidents - Any business that utilizes vehicles is susceptible to auto accidents. These activities could lead to serious injuries or fatalities. Additionally, the vehicles involved in accidents could ultimately be rendered useless following substantial damage.
Common Types of Construction Insurance
Flooring contractors should have adequate insurance to manage their risks. Key forms of coverage for these contractors to consider include:
Workers' compensation - Workers' compensation insurance covers costs associated with employees work-related injuries or illnesses. Since flooring installation is physical demanding work, employees could suffer from back strain or knee injuries, or sustain injuries from tools such as saws, nails or hammers. While injuries are infrequent, they can be severe and require extensive medical treatment, resulting in a loss of ability to work. Workers' compensation insurance is critical coverage, as it takes care of the injured employee in the event of an accident. This coverage will pay medical bills associated with work-related injuries and compensate employees for lost wages - which can occur in injuries are severe enough for doctors to recommend taking time off. What's more, workers' compensation policies typically come with employer's liability coverage, which can provide protection for employers if lawsuits are brought against them for their negligence (whether actual or alleged) in workplace injuries.
General liability - General liability insurance covers third-party claims of injury or property damaged caused by routine operations. Flooring contractors can face liability exposures if they work in occupied buildings or customers come into their offices or showrooms. This type of coverage can also protect flooring contractors if clients slip and fall on flooring. General liability insurance may also cover damage to a customer's building caused by a contractor. Additionally, it can provide coverage for instances of reputational harm or advertising injury.
Completed operations - Completed operations claims occur when injury or property damage results from finished work. This coverage can protect businesses that provide services and does not apply until after their work is done. For example issues can arise if flooring contractors don't properly moisture test before the start of projects, leading to damaged floors later. If materials are improperly installed or if the materials themselves are low quality, completed operations could help mitigate liability risks.
Commercial auto - Flooring contractors may use box trucks or vans to transport employees, materials and equipment to worksites, posing various auto exposures. Commercial auto insurance can cover damage to others vehicles and medical payments stemming from auto accidents. Physical damage insurance covers damage to company vehicles, while liability insurance covers damage to other vehicles. Hired and non-owned coverage takes care of rental vehicles and employee-owned vehicles used for business reasons.
Property - Damage to a company's physical assets, including buildings and business property, may result in property claims. Even if flooring contractors work out of their homes or do not have their own buildings, business assets such as equipment, tools and computers are still at risk of property damage. Fire hazards may also be higher for floorings contractors if they store flammable materials, including stains and wood flooring. Property insurance protects only from perils outlined in the policy. For example, floods are generally not considered covered events. In some cases, additional coverage may be necessary.
Inland marine or equipment floater - Since commercial property insurance only covers business property at the location listed on the policy, inland marine insurance may be necessary for property stolen or damaged during transit. Because flooring contractors typically travel to job sites with tools equipment floater policies can also offer protection for transit-related risks.
Commercial umbrella - Commercial umbrella insurance can provide additional coverage if claim costs exceed flooring contractors' existing policy limits. For example, if a contractor has a policy limit of $1 million, but they incur a loss totaling $2 million, an umbrella policy can help cover the difference. Other wise, these costs may have to be paid out of pocket.
Cyber liability - Flooring contractors are increasingly depending on technology to conduct their operations. After all, complex projects often require digital information transfers and contactless financial exchanges between clients, contractors, supplies and other third parties. While technology helps contractors perform these functions, digital operations can increase their risk of suffering financial losses from cyber events. Cyber liability insurance can help flooring contractors by providing coverage for first and third-party cyber claims.
To best mitigate their risks, flooring contractors should explore all policy options to fund sufficient coverage catered to their unique operations.