Purchasing insurance can be a headache, and, with clients to please and employees to manage, the last thing you have time for is sifting through policy paperwork. Operating without insurance is costly, but so is operating while underinsured. It’s about finding the sweet spot, having enough coverage but not so much that you are paying more than you should. For some insurance, project specific insurance is the optimal coverage.
Essentially pay-as-you-go insurance, project specific plans provide coverage specific to your individual project. Unlike an annual policy, you pay for insurance only at the time you are working, either on a per contract or per day basis. If you are just starting out with contracting, or you operate on a small scale, with projects coming in inconsistently, this type of policy ensures you are not overpaying for insurance.
Further personalizing this coverage is the fact that you only pay for the coverage needed for that specific project. It’s not only a matter of time, but also the unique risks of the project at hand. Underwriters consider the specifics of the jobs including services being provided, location, cost, business history. Using statistics, underwriters tailor premiums to the specific project. Projects in densely populated areas have greater potential risk of injury; history speaks to your business experience; cost of project explains what’s at stake; a new addition to a home is inherently riskier than a bathroom modification — brokers gather this information and underwriters use it to help calculate premiums. Project specific insurance premiums account for the specific risks of the project.
The key takeaway here is that project specific insurance is customized to the specific project, as the name elegantly implies. It can offer contractors adequate protection at a more affordable rate depending on the nature of their business and volume of transactions.
Project Specific Insurance Is Not Always Stand Alone
Even those with large annual policies can still benefit from project specific insurance in addition to their current coverage. You might be working on a project that has certain risks your basic plan does not account for; you might be working on a risky project that could potentially exhaust the limits of your regular plan; or you may be required by clients to have higher limits than your current policy allows. Typically, project specific insurance becomes the primary insurance on the covered project and annual practice policies include exclusions for work performed on projects covered by project-specific insurance. There are instances, however, where practice policies can sit in excess of a project-specific policy and act as an umbrella kind of coverage.
Ultimately, insurance is complicated and, in the risky business of contracting, there is no use in taking unnecessary chances — insurance is paramount. Speak to an agent to find your Goldilocks policy, coverage that is “just right” for you and your business’s needs.