Having the right insurance coverage can help protect your carpentry business if someone is injured or if property is damaged by your business. Although you likely operate your business in a safe manner, the carpentry trade has many hazards, including flying materials, hazardous tools, dust, and chemicals. Ensuring that you have the right insurance coverage is a smart business decision that will help you to win new business and protect your business finances in the case of an accident.

What insurance coverage do I need as a carpenter?

There are many types of insurance coverage to consider, but these policies are particularly relevant to carpenters:

General Liability Insurance

General liability insurance protects your company from claims of third-party bodily injury, property damage, and personal injury, and this coverage will often be required of you by clients before hiring you for a job. Carpenters work at many locations where they could unintentionally damage someone else’s property or cause an injury in the course of their work. If this happens, your company could be held liable. No matter how careful you are, accidents are still common, so general liability insurance is a crucial coverage for carpenters to obtain. 

General liability insurance also includes coverage for your products and completed operations. This covers property damage or injuries that are caused by your work after it has been completed. If a mistake in your carpentry work ends up causing property damage or injury, your policy can provide coverage. However, it’s important to note that products and completed operations coverage does not cover damage to your product or completed work itself; it only applies if the completed work causes damage to a customer’s other property.

Examples:

• Bodily injury: You are working on a house extension. A client trips over the cord of an electric sander and falls down the stairs, suffering a head injury. Your general liability insurance would cover medical costs and legal fees if the client sues.
• Property damage: You accidentally drop a hammer and damage a client’s custom flooring. Your general liability insurance would cover the damages. 
• Products and completed operations: You build a staircase for a client. A year after completing the work, one of the steps breaks and the client trips, injuring himself. The client sues you. General liability insurance would cover the lawsuit and medical costs. 

Workers’ Compensation Insurance

Carpentry can be a hazardous job, so it’s critical that your company carry workers’ compensation insurance. Carpenters can suffer common injuries while using saws, hammers, nails, and other items. In the event of a work-related injury or illness, workers’ comp will provide funds for employees’ medical expenses and a portion of lost income during recovery. Workers’ comp also provides financial benefits to surviving dependents if an employee dies in a work-related accident. 

In almost every state, workers’ compensation insurance is required for companies with employees. Make sure to consult your local state guidelines, as failure to secure adequate workers’ comp coverage can lead to civil and criminal fines and penalties. Even where it’s not required, it’s important to make sure you have sufficient workers’ compensation coverage. 

Example:

• One of your employees accidentally cuts himself while operating a saw, leaving him unable to work. Workers’ compensation insurance would provide coverage for the employee’s medical costs, rehabilitation expenses, and a portion of his lost income while he recovers.

Commercial Auto Insurance

Carpenters often use vehicles to transport lumber, pre-made items, and workers to job sites. If your business owns or leases vehicles titled under the business’s name, commercial auto insurance is a key coverage to secure. If one of your employees is driving a company vehicle and causes an accident, your commercial auto insurance will pay for any resulting third-party bodily injury, property damage, or pollution cleanup. Commercial auto insurance also covers the value of the vehicle itself if it’s damaged by a collision or another peril, like a falling object or theft.

In some cases, employees may drive their own vehicles to client locations. If your employees drive personal vehicles for work purposes, you may need to add hired and non-owned auto insurance to protect your company if an employee is at fault in an accident.

Example:

• Your employee accidentally backs into another parked vehicle while leaving a client’s home. Your commercial auto insurance would cover the damages. 

Commercial Property Insurance

Commercial property insurance will protect the value of your business property if it is destroyed or damaged by a covered peril. Carpenters may have office space or a woodworking shop, and any stored lumber can lead to a higher fire risk. If an unexpected disaster strikes your carpentry workshop, repairing or replacing your damaged property can be costly. Commercial property insurance typically provides funds for causes of loss including fire, storms, hail, explosion, water damage, and vandalism.

Example:

• A severe storm causes power lines to fall on your carpentry business’s shop and a fire breaks out, damaging your building and destroying inventory and equipment. Your commercial property insurance would cover the loss.

Inland Marine Insurance

Carpenters may transport completed projects, lumber, or valuable equipment from location to location or store items at client sites. This property is typically not covered by commercial property insurance, so inland marine insurance is necessary. Inland marine insurance provides financial protection for your business property that does not remain at a fixed location and is not covered by a standard commercial property insurance policy, including equipment, tools, supplies, and other items.

For contractors and subcontractors, an installation floater is a common type of inland marine insurance. These policies are specifically designed to cover your business while building or renovations are in progress. Installation floaters cover materials, supplies, and equipment while in transit, waiting to be installed, and during the installation process. 

Example:

• Someone breaks into one of your vehicles and steals equipment and lumber. Inland marine insurance would cover the loss. 

Additional Coverages

• A business owner’s policy (BOP) combines general liability, property, business interruption, and extra expense coverage into a single package. For small or midsize carpentry businesses, this could be a convenient way to obtain a wide range of coverage. Premiums for a business owner’s policy are typically cheaper than the cost of buying each coverage separately.
• Business income coverage will reimburse you for lost income and operating expenses if your business is forced to close due to a covered peril, such as fire, storm damage, or other property damage.
• As a carpenter, you may rely on key equipment or machinery, and without it, you may be unable to complete work you’ve been hired for. Equipment breakdown insurance covers repairs or replacement for equipment that breaks down, as well as lost business income while the equipment is out of commission. 

Pricing and Quotes

Pricing for carpenter insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:

• Business size
• Industry
• Location
• Number of employees
• Claims history

Businesses with higher risks will have higher premiums than those deemed lower risk. For example, a carpentry business with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for carpenters:

Provider	General Liability	Professional Liability	Business Owner's Policy
Embroker	??	??	??
CoverageSmith	??	??	??
CoverWallet	??	??	??
Hiscox	??	??	??
Thimble	??	??	??

Final Word

As you review what types of business insurance to purchase, it’s important to consider the various major risks for which your carpentry business could be held liable. Business insurance can help your company cope with unexpected disasters, whether it’s a car accident, damage to a client’s property, or a fire that damages your workshop. With the right insurance coverage, you and your clients will feel confident in the knowledge that your company would be able to cope with any major incidents that arise.