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Contractor's Insurance refers to a type of insurance coverage specifically designed to protect contractors and construction professionals from potential risks and liabilities that arise during the course of their work. It is important for contractors because they are exposed to various hazards related to the physical nature of their work, equipment, materials, and the people they employ or work with.

There are several types of contractor’s insurance, including:

1. General Liability Insurance: Protects against third-party claims for bodily injury, property damage, and personal injury. For example, if someone is injured on a job site or if the contractor accidentally damages someone else's property, this insurance would cover the costs of legal fees, medical expenses, or repair costs.

2. Workers' Compensation Insurance: Covers medical expenses and lost wages for employees who are injured while working on the job. It’s often required by law for businesses with employees, depending on the jurisdiction.

3. Professional Liability Insurance: Also known as "Errors and Omissions" insurance, it protects contractors from claims related to mistakes, omissions, or negligence in the work they do. This is particularly important for contractors who provide design, consulting, or planning services.

4. Commercial Auto Insurance: If a contractor uses vehicles for business purposes (e.g., transporting tools, equipment, or workers), commercial auto insurance covers accidents, damage to vehicles, and liability while driving for business.

5. Equipment and Tool Insurance: Covers the loss, theft, or damage of tools, machinery, or other equipment that contractors rely on to perform their work.

6. Builders Risk Insurance: Provides coverage for damage to a building under construction. This could include damage caused by weather, fire, theft, or vandalism while the project is ongoing.

7. Inland Marine Insurance: This covers tools, materials, and equipment that are being transported or temporarily stored away from a contractor’s primary location.

Having the appropriate contractor’s insurance is crucial for minimizing financial risk and ensuring business continuity. It can also be required by clients or local governments before a contractor is allowed to work on certain projects.