The Dangers of Over and Under-Insurance for Asphalt Maintenance Companies

Having insurance for asphalt maintenance companies can protect you & your workers. It's crucial to choose a coverage that is not over or underinsured.

Judson Burdon
Posted by Judson Burdon on August 12

Insurance for asphalt maintenance companies can be tricky, especially if you have no previous experience. It’s necessary for your asphalt maintenance company to obtain insurance, however, since you do not want to put your family or company at risk.

Choosing the suitable types and amounts of insurance can make an enormous difference if anything ever goes wrong. Many people end up over- or under-insured with their companies, and either is dangerous.

What Are The Types of Insurance for Asphalt Maintenance Companies?

1. Liability

Liability insurance is necessary for small businesses. This contractor insurance for asphalt maintenance companies covers any damage that is done while you’re on the job. This type covers people, vehicles, and other property that is not part of your company.

For example, say you’re pulling up to a sealcoating job, and the business owner has not moved their car yet. One of the crew members accidentally puts a spray wand through the car window while you’re unloading your equipment. Small business liability insurance covers the replacement.

2. Workers’ Compensation

Also referred to as workers’ comp, this contractor insurance for asphalt maintenance companies covers the people you employ while they’re on a job site. Most people have heard stories about worker’s comp and how it operates. You cannot avoid this insurance in any case.

For example, you have someone sealcoating the edge of a parking lot. They trip over a curb, take a fall, and need to see a doctor to confirm they did not concuss themselves. Worker’s compensation covers those medical bills.

How much can you earn as a professional sealcoater? Calculator

3. Other Varieties

You will likely need other varieties of insurance depending on where your asphalt maintenance company is as well. For example, you may need vehicle insurance to register your fleet trucks for license plates.

It’s important to check the requirements for your local area. Additionally, you may want to investigate your competition. Sometimes, having specific contractor insurance is an advantage while you are bidding on jobs.

What is Under-Insurance?

Under-insurance is incredibly common, especially in small business liability. With under-insurance, your asphalt maintenance company carries less insurance than it needs. This situation can become a financial issue if someone files a claim.

Typically, under-insurance happens when you want a lower insurance premium each month. Additionally, your company may be under-insured due to growth and not reevaluating your insurance options.

What is Over-Insurance?

Over-insurance is the opposite of under-insurance in small business liability. With over-insurance, you have too much insurance, and you are paying a higher premium each month that you often have no chance of recouping.

Over-insurance happens when people worry about under-insurance. It can also occur if you overestimate how much small business liability your asphalt maintenance company needs for the level you’re working at.

How Your Insurance Decisions Affect Your Asphalt Maintenance Company

Contractor insurance may seem abstract, but it can quickly become real. In the case of under-insurance, it can become a financial disaster that you are personally liable for. At that point, you could also have to use company profits to pay the claim as well.

This event can become so severe that your company cannot recover. Then you must start over while potentially navigating the courts to settle the claim that happened while you were under-insured. It’s the ultimate small business liability nightmare.

Over-insurance is not quite as large a financial pitfall, which is why it is better to be over-insured than under-insured. Your asphalt maintenance company loses money each month that you could save, and you cannot recoup the loss.

Sealcoating workers are covered by asphalt maintenance company's insurance policy

Your small business liability insurance choices, in general, can also affect what jobs you get. Clients may decide that you do not carry enough insurance to cover the risks they take when hiring you. That means fewer jobs available, which cuts into your business.

Insurance can also affect your workers. You care about your crew, and without the proper insurance, you cannot get them the care they may need in the case of accidents. Additionally, it’s a potential legal issue if you do not have adequate insurance.

We now offer the AK Commercial Insurance program! Apply today to allow your business to win more commercial projects and to protect your company!

Want to make sure you’ve got everything right for your business? Asphalt Kingdom offers a free contractor white paper detailing the mistakes and solutions that are common for contractors, along with advice.

We also have a Build Your Own Business Blueprint to help guide contractors in all things asphalt maintenance. Check out Asphalt Kingdom's BYOBB course here.

Download 5 Mistakes Successful Contractors Avoid

Topics: Asphalt Maintenance Business

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