What Types of Insurance Does a Roofing Business Need?
Roofing businesses provide important repairs for countless customers, considering roofs exist on nearly every building. Whether repairs are for general maintenance or follow an accident or catastrophe, customers rely on the expertise of roofing businesses to protect their structures with a quality roof.
However, replacing and installing roofing is not easy and comes with many risks. As a result, insurance is essential to protect roofing businesses from the financial responsibility of a loss or accident.
Related: How to start a roofing business
What Are Some Risks for a Roofing Business?
Roofing work is dangerous and has several risks. For example, some of the risks for a roofing business include the following:
- Employee injuries
- Customer injuries or property harm
- Car accidents
- Faulty finished products
- Damage or loss to equipment
The most significant risk for roofing businesses is the high likelihood of employee injuries—often, the injuries are severe. For instance, roofing employees have a risk of falls that can be fatal or result in broken bones, cuts, or concussions. Falls can occur for various reasons, some of which include
- Falling off the roof from slipping or losing balance
- Falling off ladders
- Deterioration or collapse of scaffolding
- Falling through uncovered openings or weak spots
Aside from fall injuries, employees encounter several other hazards. For example, roofers working with molten bitumen (a hot tar-like material) can sustain severe burn injuries. Also, roofers may be injured due to extreme temperatures, falling objects, and contact with electrical currents, especially if power lines are nearby.
Illnesses are another concern caused by exposure to toxic fumes and substances. For instance, skin, eye, or respiratory irritation occurs from extended contact with tar pitch fumes and solvents (i.e., caulk, cement, sealants, and adhesives). Older homes may also contain asbestos, which is another hazard to an employee’s health.
Customer Injuries and Property Harm
Roofing businesses complete work at a customer’s location. Therefore, customers and their homes may come across hazards. For example, customers may trip on equipment. They can also be injured by falling objects, such as materials that fall through weak or open spots on the roof.
Falling objects can also cause property damage to homes, cars, fences, or outdoor décor. Another property damage risk (and injury risk) is fire. Fires can cause extensive damage to a home and surrounding properties. A fire can begin from the roofing business’s equipment, such as torches, heating kettles, and the application of hot bitumen.
Other sources of property harm include
- Severing electricity to surrounding areas by damaging power lines
- Damaging the structure, such as skylights, satellite dishes, and chimneys
- Overloading the roof that leads to collapse
Since roofing businesses travel between job sites to complete work, there will be significant exposure to car accidents. Some of the more common reasons that car accidents occur are due to hazards such as
- Distracted driving
- Driver fatigue
- Driving in unfamiliar locations
- Poor visibility
- Inclement weather
- Operating large vehicles or trailers
Car accidents can cause major financial issues for a small business. For example, at-fault accidents can lead to expensive lawsuits against the business. Further, car accidents can add up additional costs for vehicle damage to business-owned vehicles, trailers, or custom or specialty vehicles.
Roofing businesses that transport bitumen, the tar-like material used on roofs, have a higher liability risk in car accidents because uncooled bitumen or a buildup of its fumes may combust, causing significant damage and harm to surrounding drivers.
Faulty Finished Products
Faulty work not only risks structure damage that the roofing company would be responsible for but can also cause bodily injury and property damage lawsuits. If a roofing business fails to complete work correctly, the customer’s home may be exposed to structural damage or deterioration. For example, failing to install roofing materials properly may cause water leaks, pest issues, and fires.
In addition, poor installation of supports or drainage systems can lead to collapse or standing water. Standing water is heavy, risking collapse, but it also causes leaks, mold, accelerated deterioration, and fires.
Damage or Loss to Equipment
Since roofing businesses travel between job sites, their equipment will be frequently moved. As a result, equipment that moves often may be damaged, lost, or stolen. For example, mobile equipment can be damaged during car accidents or stolen while sitting at a job site. Further, unsecured equipment left overnight at job sites may increase the risk of theft, vandalism, or damage.
What Types of Insurance Policies Should a Roofing Business Consider?
Although there are many hazards that roofing businesses encounter during normal work operations, there are insurance policies to cover the risks. Some of the key policies that a roofing business should consider include the following:
- Workers’ compensation insurance
- Commercial liability insurance
- Commercial automobile insurance
- General liability insurance
- Inland marine insurance
Workers’ Compensation Insurance
Workers’ compensation coverage protects a business against employee injury claims. Employees come across a significant amount of risk. Following an injury, they may accumulate costly expenses, such as medical bills and a loss of income during recovery. However, a workers’ compensation policy covers many claim-related costs such as:
- Medical payments
- Lost wages
- Ongoing rehabilitation care
- Disability income
- Funeral expenses
Many states require businesses with employees to have workers’ compensation insurance coverage; however, it is not always required. Still, workers’ compensation is essential for roofing businesses with employees because the policy covers an employee’s expenses, and it protects the business from potential lawsuits.
Commercial Liability Insurance
A general liability policy for premises and operations covers claims of bodily injury or property damage that occurs at the business’s location or due to the activities of the business. Roofing businesses will likely have few on-premise visitors, so the risk of on-site liability is minimal. Nevertheless, a general liability policy for premises and operations is essential to cover the high liability risks that occur at job sites.
In the event of a claim, a general liability policy covers liability-related expenses. For example, if the roofing business injures a customer at the job site, the general liability policy would cover
- The customer’s medical expenses
- Repairs to damaged property
- The roofing business’s legal defense costs
- Settlements owed to the customer
Commercial Auto Insurance
A commercial automobile insurance policy insures business-owned vehicles for liability, such as bodily injury or property damage claims, and for physical damage. The liability insurance covers at-fault accidents caused by drivers using a company vehicle. In addition to covering bodily injury and property damage, liability insurance also covers legal defense costs and settlements.
Obtaining commercial auto insurance is important as many personal auto insurance policies won’t cover an accident if a personal vehicle is being used for company business.
An automobile insurance policy also covers business-owned vehicles, trailers, and specialty vehicles for physical damage. The physical damage coverage includes perils such as collisions or non-collision events (called comprehensive coverage). For instance, comprehensive coverage protects against hazards such as
- Falling objects
- Wind or hail
- Glass breakage
General Liability Insurance
General liability coverage protects a business from bodily injury and property damage claims caused by products or due to the completed work. For roofing businesses, liability from faulty, defective, or incorrect work is the greater risk that needs coverage.
For example, a roof that leaks due to an incorrect installation may damage the customer’s home and result in a lawsuit against the roofing business. Fortunately, this liability policy covers the associated claim expenses, including
- Third-party medical bills
- Third-party property damage repairs
- Legal defense costs
- Settlement costs
It is typically recommended that all contractors carry a general liability insurance policy, as homeowners and commercial clients will often request a certificate of insurance to ensure they are protected in the event of personal injury while on their property.
Inland Marine Insurance
An inland marine insurance policy covers business-owned equipment and materials transported over land. The roofing business’s mobile equipment is protected wherever it goes and is not limited to a permanent location. The business’s mobile equipment, supplies, electronics, and materials are covered for perils such as loss, theft, or damage due to an event such as a storm.
How much is insurance for a roofing business?
Insurance costs fluctuate depending on the needs of the roofing business. For example, a roofing business with few employees and a small fleet of vehicles will have lower exposure to risk than a large roofing business with many employees and numerous vehicles. Therefore, the smaller roofing business with lower risk and coverage amounts will have a lower insurance cost.
Some factors that influence the cost of insurance include things such as:
– The number of business-owned vehicles
– Any customization or specialty vehicles
– The number of employees on the payroll
– Employee training and safety precautions
– Third-party safety measures
– The condition and value of tools, materials, and equipment
– Any past or current lawsuits or insurance claims
In addition to business insurance, a surety bond may be needed. A surety bond is a type of insurance that is also known as a contractor bond, is a form of business insurance that will pay your customer if you fail to complete a job.
The best way to determine the cost of roofer’s insurance is to contact an insurance company for an insurance quote. The insurance company can generate an estimate based on your roofing business’s insurance needs, including any bundle discounts. Generally, getting quotes from multiple insurance agents helps compare prices and allows you to pick a policy package with the best coverage for a fair price.