The 7 Deadly Sins of Buying Contractors’ Insurance (And How to Avoid Them)

The 7 Deadly Sins

Buying insurance for your contracting business shouldn’t feel like guesswork, but too often it does. Many contractors in Minnesota make costly mistakes when choosing coverage, leaving their business exposed when it matters most.

If you want to protect your business, your reputation, and your bottom line, avoid these 7 deadly sins of buying contractors’ insurance.

1. Choosing Price Over Protection

It’s tempting to choose the cheapest policy but that often means less coverage, higher deductibles, and major gaps.

Many low-cost policies exclude key risks, such as subcontractor work, completed operations, or certain job types.

Smart move: Focus on value, not just price. The right policy should protect your real risks, not just fit a budget.

2. Not Understanding What Your Policy Covers

Many contractors assume they’re covered for everything. That’s rarely true.

For example:

General Liability may not cover faulty workmanship.
Tools and equipment may require separate coverage.
Pollution or mold exclusions are common.

Smart move: Ask for a clear breakdown of what’s included and, more importantly, what’s not.

3. Misclassifying Your Business

Insurance companies rate your policy based on your work. If it’s misclassified, it can lead to:

Denied claims
Policy cancellation
Unexpected premium increases

For example, a carpenter doing structural work versus finish work can be rated very differently.

Smart move: Be completely honest and detailed about your operations.

4. Ignoring Workers’ Compensation Requirements

In Minnesota, if you have employees, even part-time, you’re usually required to carry Workers’ Compensation insurance.

Skipping it can result in:

Heavy fines
Personal liability for injuries
Legal trouble

Smart move: Make sure you’re compliant and properly covered—especially if your team is growing.

5. Assuming Subcontractors Are Covered

One of the biggest misconceptions is thinking, “My subs have their own insurance, so I’m good.”

That’s not always true.

If your subcontractor:

Doesn’t carry insurance
Has lapsed coverage
Lists you incorrectly

You could be held responsible for claims.

Smart move: Always collect Certificates of Insurance (COIs) and regularly verify coverage.

6. Skipping Key Coverages

Many contractors only carry General Liability, but that’s not enough.

Important coverages often overlooked:

Commercial Auto Insurance (for work vehicles)
Inland Marine (tools & equipment)
Umbrella Insurance (extra liability protection)
Builder’s Risk (projects under construction)

Smart move: Build a complete insurance program tailored to your business, not a one-size-fits-all policy.

7. Not Reviewing Your Policy Annually

Your business changes, and your insurance should too.

If you’ve:

Taken on bigger jobs
Hired more employees
Bought new equipment
Expanded services

Your current policy may no longer fit your needs.

Smart move: Review your coverage at least once a year with an independent, experienced agent.

Final Thoughts: Protect Your Business the Right Way

Contracting is already risky and your insurance shouldn’t add to that risk.

Avoiding these 7 deadly sins can mean the difference between
A smooth claim and financial protection
A denied claim and major out-of-pocket costs

The right insurance strategy doesn’t just protect your business—it helps it grow with confidence.

Get Expert Help (No Pressure, Just Advice)

At Quast Insurance, we specialize in helping Minnesota contractors find the right coverage at the best value. We work with multiple top-rated carriers to customize protection for your specific trade and risk level.

Call 651-212-7157 today for a fast, free quote or coverage review
Or let us shop your current policy to see if you’re properly protected (and not overpaying)

Don’t leave your business exposed—get covered the right way.