Why Some Business Contracts Include Insurance Requirements

Why Some Business Contracts Include Insurance Requirements

Understanding contractual commercial insurance requirements.

If you are a small business or independent contractor working with another company, then you will probably sign a contract that lays out your responsibilities and expectations.  One thing that many businesses and contractors are surprised to see is that their contract requires them to carry certain types of business insurance in Queens County, New York.  But why do business contracts have insurance requirements?  Here’s what you need to know.

Typically, business contracts stipulate insurance requirements when one entity has an obligation to protect the other.  For instance, if you are a plumber working on behalf of a construction company, they would require you to carry insurance to ensure that they are not held liable for any mistakes you make in your work.

Usually, a business partner will require you to carry insurance if your work poses a risk of personal injury, property damage, copyright infringement, cybercrime/data breach, and other liability issues.  Oftentimes, business contracts will require you to show proof of general liability, workers’ compensation, professional liability (also known an errors and omissions), and cyber liability insurance.

In some cases, the business you are working for may require you to add them to your insurance policies as an “additional insured.”  Listing the other business entity under your policies ensures that they will be covered in the event that your actions result in a claim against them.

This is what you need to know about business contracts and commercial insurance requirements.  Do you have additional questions regarding your business insurance in Queens County, New York?  Then contact the experts at 01 Insurance.  Our dedicated team is eager to assist you with all your coverage needs today.