General Contractor Insurance in New Jersey

New Jersey recently passed the Home Improvement and Home Elevation Contractor Licensing Act, which has new regulations for contractors. As part of the requirements, contractors who work in home improvement or home elevation must show proof of commercial general liability insurance in a minimum amount of $500,000 per-occurrence.

General liability insurance is the most common type of liability insurance for contractors. It protects your construction business from expenses associated with third-party mishaps, such as customer bodily injuries and accidental property damage.

Counties and cities often have their own requirements for this type of insurance. For example, Atlantic City requires contractors to carry a general liability policy with a $1 million per-occurrence limit and the city named as an additional insured.

Most commercial leases also require businesses to carry this coverage. Adding commercial umbrella insurance can boost your coverage on general liability insurance and other policies.

Contractor general liability insurance can also help protect against advertising injuries, such as libel, slander, and copyright infringement. So, for example, if an employee at your business posts false negative comments about a competitor on social media, your policy would help pay for legal costs if the other business sues.

New Jersey law requires businesses that have one or more employees to carry workers’ compensation insurance. Home improvement and home elevation contractors must submit proof of workers' comp to the New Jersey State Board of Home Improvement and Home Elevation Contractors as part of the registration process.

Workers' comp covers medical bills for work-related injuries and provides disability benefits while an employee is recovering and unable to work. It's especially important for those in high-risk professions, such as roofing, tree service, and HVAC installation.

Sole proprietors and others who are not required to carry coverage can still buy workers' comp for themselves. If you're injured on the job, your health insurance provider can deny the claim. That could leave you paying for an expensive medical treatment, or out of work with no recourse for your lost wages.

When you buy a workers' comp policy in New Jersey, it comes with employer's liability insurance. This policy helps pay for legal fees if an employee files a lawsuit blaming your construction business for their injury.

Commercial auto insurance is required in New Jersey for all vehicles owned by your general contracting company. This policy covers legal expenses resulting from an accident that injures someone or damages their property. It can also cover vehicle theft, weather damage, and vandalism.

New Jersey offers basic and standard auto insurance policies. The standard plan includes a minimum of:

• Bodily injury liability per person: $25,000
• Bodily injury liability per accident: $50,000
• Property damage liability per accident: $25,000
• Personal injury protection (PIP): $15,000

Note that personal injury protection insurance is required in New Jersey. This coverage provides medical payments coverage after a car accident, regardless of who was at fault.

If you drive your own vehicle for work purposes, or rent or lease a vehicle for business use, you'll need a separate policy called hired and non-owned auto insurance (HNOA). Your personal auto insurance policy won't cover incidents that happen while you're driving for work, with the exception of a commute.

As with other types of insurance, your county or city may require a specific amount of auto liability insurance. You may need additional coverage depending on the kind of work you do and the business vehicles you own.

New Jersey state law requires contractors who work in home elevation to carry cargo insurance or a similar inland marine insurance policy. The policy must cover home elevation activities and have a per-occurrence limit of $1 million or more.

Cargo insurance covers third-party property in transit, and would pay for damages such as a cracked wall or other structural issue caused by a home being raised.

As part of the registration process, contractors in New Jersey must provide a compliance bond, letter of credit, or other security maintained with the state board to cover any potential violations.

A compliance bond is one type of surety bond. Counties and cities in New Jersey might also require you to purchase a surety bond before you begin work, or clients might request one.

A surety bond guarantees reimbursement if a general contractor fails to fulfill the terms of a contract. Unlike an insurance claim, this amount must be paid back to the company that issued the bond.

Different types of bonds act as financial guarantees for a contracting business. For example, you might need a bid bond to bid on a construction project, or a performance bond to sign a contract with a client.

Even when it's not required, contractors often choose to be bonded and insured to protect themselves and their clients and to show they are reliable.