Essential Insurance Coverage for Flooring Contractors: What You Need to Protect Your Business

If you're starting or running a flooring contractor business, having the right insurance coverage is essential. This guide provides a checklist of the basic coverages you should consider. Once you have the fundamentals in place, you can adjust coverage amounts based on your business's needs.

Flooring businesses can take many forms. Some have retail showrooms, some operate warehouses with building materials, and others focus solely on installation. Additionally, some contractors work with builders, while others specialize in residential remodeling or commercial projects. Regardless of your business model, this article will help you assess the necessary insurance coverages.

A Flooring Contractor Selecting his Materials

1. General Liability Insurance

The foundation of any business insurance program is general liability insurance, which protects against lawsuits for bodily injury and property damage caused to others. This coverage includes:

• Slips and falls – Accidents can occur at your office, showroom, warehouse, or job site. Keeping walkways clear and well-lit can help reduce risks.

• Product and completed operations liability – Covers liability related to your work. While flooring installations are generally low-risk, defects can still occur.

• Personal and advertising injury – Protects against claims related to advertisements or statements that cause reputational harm.

For a more detailed analysis of general liability policies, check out this article: My Framework for Analyzing General Liability Insurance Policies.

2. Errors and Omissions (E&O) Insurance

While general liability covers physical damage and injuries, E&O insurance protects against claims of negligence, mistakes, or failures to fulfill contractual obligations. This is especially relevant if your business provides design services. If a design flaw leads to issues, this insurance can help cover related legal and financial consequences.

3. Workers' Compensation Insurance

If you hire employees, subcontractors, or helpers, workers' compensation insurance is crucial. In the U.S., if someone working for you gets injured and doesn’t have their own coverage, you could be held financially responsible. This insurance covers medical expenses and lost wages for work-related injuries.

For more information, read: My Framework for Analyzing Workers' Compensation Insurance.

4. Auto Insurance

If your business owns vehicles, they must be insured under a commercial auto insurance policy. If you use personal vehicles for business purposes, consider hired and non-owned auto liability to supplement your personal auto insurance.

Learn more here: What is Commercial Auto Insurance?.

5. Umbrella Insurance

An umbrella policy provides extra liability coverage beyond your other policies. Consider this coverage if:

• Contracts require additional insurance.

• Your business owns vehicles.

• You engage in high-risk activities.

• You have assets that could make you a legal target.

6. Property Insurance

Property insurance covers physical assets, including:

• Buildings (if owned)

• Inventory in your warehouse or showroom

• Office furniture and equipment

Ensure your coverage is based on replacement cost estimates rather than market value to fully protect your assets in case of a disaster.

7. Inland Marine Insurance

This insurance covers tools and materials used in your business, including:

• Tools transported to job sites

• Borrowed or rented equipment

• Installation floaters (covering flooring materials in transit or stored on-site before installation)

8. Employment Practices Liability Insurance (EPLI)

If you have employees, EPLI can protect you from lawsuits related to hiring and firing practices. Claims can include discrimination, wrongful termination, and workplace harassment. These types of lawsuits are common and can be costly.

9. Cyber Liability Insurance

With businesses increasingly relying on digital tools, cyber liability insurance has become essential. It protects against:

• Data breaches (e.g., customer credit card information, blueprints, or client details)

• Ransomware and cyberattacks that disrupt operations

• Employee errors, such as falling for phishing scams

For more details, check out this video: Why Businesses Need Cyber Insurance.

10. Crime Insurance

Crime insurance helps protect against financial losses from:

• Employee theft (e.g., a long-time employee embezzling funds)

• Third-party acts (e.g., an employee stealing from a customer)

  
  

Conclusion

This guide provides an overview of the key insurance policies every flooring contractor in Maryland should consider. Reviewing your coverage regularly ensures your business is protected against potential risks. For a personalized analysis, consulting with an insurance broker is highly recommended.

If you're looking for business insurance in Frederick, Maryland, or simply have questions and would like a of your insurance program, you can contact me at insuranceforentrepreneursdh@gmail.com.