Handyman Business Risk Exposures: Why Insurance is Essential

Understanding The Risks Faced by Handyman Businesses

Building a career as a professional handyman makes perfect sense if you love working with your hands and have a talent for handling a wide range of improvement, repair, maintenance and installation tasks. But as rewarding as it can be to work as a handyman or even start your own handyman business, it also exposes you to several risks that could cause severe damage to your bottom line and jeopardize your business's success.

The best way to deal with the risks faced by handyman businesses is to transfer the risk via the right handyman insurance coverage. That's why a robust business insurance policy is critical to any reliable, effective handyman risk management plan. It's critically important to thoroughly understand the potential risks that are part of life as a handyman and how they can be mitigated with the right insurance. If you have questions or need more information on handyman insurance, rely on the experienced brokers at Morison Insurance to answer all your questions and track down the right combination of coverages for your unique insurance needs.

3 Types of Risks Handyman Businesses Should Know About

There is a wide range of risks handyman businesses can be subjected to, but they tend to fall into three broad categories. We break down the three overarching types of risks handyman businesses need to be aware of and list several risks within those categories, along with the types of insurance coverage designed to address them. It's important to note that risk exposures can vary significantly based on factors such as how you choose to run your business and the specific types of services you offer, so you may need or want the financial protection of additional coverage types that are not listed below.

Suppose you need clarification on which types of risks and corresponding coverages are most applicable to your business practices. In that case, the best course of action is to contact a Morison Insurance broker. Our insurance experts with consult with you to learn more about your unique business, so we can find the perfect combination of insurance coverages and give you the peace of mind that comes with knowing you won't suffer major financial setbacks if you're stuck with unexpected expenses resulting from an insured peril.

1. Liability Risks

Handyman professionals are exposed to several liability risks, which is valid for any business professional—but because handymen and handywomen typically work on their client's properties rather than at their own commercial property, they are exposed to additional risks that don't necessarily apply to professionals who don't have to travel to a job site to provide their services. That's one of the key reasons why handyman liability insurance is such an essential part of business insurance packages for handyman businesses.

Liability policies are designed to cover costs related to litigation and legal settlements should you be accused of causing injury or damage and be forced to defend yourself in a court of law and if you are found liable and required to pay a settlement to the plaintiff. Exactly which costs are covered depends on the types of coverage you have in place and how your specific liability policies are written.

Here are some of the liability risks that can be mitigated with the right handyman insurance coverages:

• Third-Party Bodily Injury or Property Damage: These are two of the most common risks for handyman businesses, especially when it comes to third-party property damage because handymen work on their client's properties, and that means there are numerous opportunities to cause accidental damage. It's easy to tell yourself you'll just be really careful and won't have to worry about this type of risk, but that's not the right approach. Even the most cautious person can cause accidental damage to property or make a mistake that leads to bodily injury. Commercial general liability (CGL) insurance addresses the costs resulting from these grievances and advertising injuries.
• Problems With Completed Work: When third-party property damage or third-party injury occurs while handyman work is in progress, the resulting litigation falls under commercial general liability coverage. But if it happens after the work has been completed, you need completed operations coverage to get insurance compensation for litigation and settlement costs. This type of CGL insurance can be added to your policy. An example is if you install a ceiling fan and don't wire it correctly, leading to a destructive electrical fire a few weeks or months after the installation, prompting the homeowner to sue to recover the fire damage restoration cost.
• Polluting Events: If you don't typically work with materials and substances that have obvious potential to cause pollution, you may be wondering how this risk could apply to you. But use relatively common materials such as paint or work around building components such as wastewater disposal lines. You do have the potential to cause a polluting event that could result in property damage litigation to cover clean-up costs and replacements, not to mention regulatory fines. It's also important to remember that innocuous substances, such as gravel, that are not inherently toxic can cause pollution if they end up in the wrong place. This type of liability claim requires you to have pollution liability insurance as part of your handyman insurance package.
• Information Data Breaches: This may sound like an odd concern for a handyman—you don't spend your work days typing away on a computer or surfing the internet, so why worry about cyber liability issues? The fact is that pretty much all businesses in this day and age conduct some business online, whether it's payment transfers from clients or to your employees, storing sensitive customer information like their financial and identity details, or something else. When that information is in your care, it's your responsibility to keep it safe. If you're targeted by hackers, phishers or other cyber criminals, your clients could sue you and may need to deal with additional costs like ransom payments. You can get insurance compensation for those types of claims when you have cyber liability insurance.
• Accusations of Negligence and Faulty Workmanship: While many handyman insurance policies don't include coverage for these types of risks, they really should. If you are sued for actual or alleged negligence that leads to financial loss, you'll need errors and omissions insurance to cover the cost of your legal defence and any settlements you are liable for. Also referred to as E&O insurance or professional liability insurance, it's essential to understand that errors and omissions coverage applies to your legal costs whether you're actually found responsible for the allegations against you.
• Accessing Legal Assistance: This isn't a risk, but it still bears mentioning. There may be times when you need some legal advice, assistance with drafting or checking over legal documents, and other help from a lawyer. You wouldn't want to make an insurance claim for something relatively minor, and that's where legal expenses insurance comes in. It gives you access to a legal helpline and other possible legal services, and there's no need to file an insurance claim when you need to talk to a legal professional, get document services and other minor legal services.

2. Property Risks

Litigation and settlements aren't the only perils that could force a handyman business to contend with the risk of loss. You have commercial property, tools and equipment necessary for you to deliver handyman services, and they're just as vulnerable to damage and destruction as anything else. You likely need the funds available to deal with repair or replacement costs for everything all at once should they be destroyed by a fire or stolen, for example. While property risks, in general, are relatively straightforward and involve the need to repair or replace buildings, tools and equipment that have been damaged or destroyed, different types of commercial property insurance are necessary to address various types of damage, damage that occurs in other locations, and so on.

Some of the risks that can be mitigated with the right commercial property insurance policy are:

• Damage to Your Commercial Property: If you have a commercial property that you operate your business out of—or even if you run your handyman business from home—commercial property insurance is a must-have. It offers you insurance protection against the costs of restoration and replacement should your property be damaged or destroyed by a fire or natural disaster such as a severe weather event.
• Damage to Your Tools or Equipment or Theft of Tools: Depending on the type of services you offer as a handyman, you need specific tools and pieces of mobile equipment to deliver those services effectively and safely. Since you must bring them to your client's properties, you need insurance coverage called tools and equipment insurance to get financial assistance with replacing them if they are damaged, destroyed or stolen while off your commercial property.
• Damage to Materials or Fixtures Before Installation: You may be hired to work on flooring or fixture installation because of injury or destruction that occurs away from your commercial property. If you are transporting flooring material, for example, and it's damaged during the trip, or you leave it at the client's property overnight, and it suffers damage, you could be responsible for the cost of replacing it. Adding an installation floater to your commercial property coverage will help you get financial assistance from your insurance company to deal with those costs.
• Expenses Caused By Business Interruptions: If your property, tools or equipment need to be repaired or replaced, those processes probably aren't going to happen overnight. In the meantime, you may be forced to stop or delay work, which will hurt your bottom line. Business interruption coverage offers you funds to deal with expenses such as a temporary business location and equipment rental so you can keep working, and may also cover your loss of income while damage restoration is taking place.

3. Automobile Risks

You must travel to and between job sites if you provide handyman services. You may use your personal vehicle for that which, as you know, has to be covered by personal auto insurance to be driven legally in Canada. Suppose you use your vehicle for work purposes, such as transporting subcontractors or employees to job sites or carrying materials. In that case, it's considered a commercial vehicle that must have a commercial auto insurance policy. Commercial vehicle insurance covers the same risks as personal auto insurance. It can have similar coverage additions, such as accident forgiveness, but it applies to vehicles being used for business purposes, and your car insurance does not.

Why Handyman Insurance is So Important

Suppose you've read through the three categories of risks that handyman businesses are faced with. In that case, you'll know that the financial protection offered by the right handyman insurance coverage is necessary to help deal with a wide range of costs related to handyman risk exposures. While those handyman business risks are the major reason why handyman insurance is essential and why it's so important to speak with an experienced broker who can find the best coverage for your unique insurance needs, insurance compensation to deal with financial setbacks isn't the only reason why you need handyman insurance.

The fact that many handyman professionals don't necessarily consider when they're first starting out is that many clients will refuse to hire a handyman who can't provide proof of insurance. If you're a subcontractor, it's unlikely that any legitimate independent contractor worth their salt will hire you without insurance coverage. That means if you can't produce a certificate of insurance that lists the suitable types of coverage for your services, you'll have to wave goodbye to lucrative contracts that will go to your competition instead. If you hire subcontractors, you should also require them to have their own handyman insurance coverage.