Water damage restoration contractors play a critical role in helping Colorado property owners recover from floods, burst pipes, and severe storms. But working in damaged buildings with structural risks, mold exposure, and costly repairs makes restoration contractors highly vulnerable to lawsuits and financial losses.
Without the right insurance, a contaminated water cleanup gone wrong, property damage claim, or workplace injury could put your business at risk. Here’s what Colorado water damage restoration contractors need to know about staying fully protected.
The Biggest Risks for Water Damage Restoration Contractors in Colorado
💧 Mold & Bacteria Exposure – Flooded properties can contain hazardous mold and bacteria, leading to health risks and liability claims.
🏗 Structural Damage Risks – Working in water-damaged buildings increases the risk of ceiling collapses and falls.
⚠️ Equipment Theft & Damage – Dehumidifiers, industrial fans, and moisture detectors are expensive and often stolen from job sites.
💰 Client Disputes Over Incomplete Restoration – If a homeowner believes the job wasn’t done correctly, they could sue for additional damages.
💡 Real Case Study: A restoration company in Colorado Springs faced a $150,000 lawsuit after a mold issue resurfaced in a home they previously restored. Professional liability insurance covered legal fees and damages.
Essential Insurance for Water Damage Restoration Contractors
✔ General Liability Insurance – Covers property damage, injuries, and lawsuits related to restoration work.
✔ Workers’ Compensation – Legally required in Colorado for businesses with employees.
✔ Professional Liability Insurance – Covers claims of improper water extraction or mold remediation failures.
✔ Pollution Liability Insurance – Protects against mold contamination or hazardous material exposure claims.
✔ Commercial Auto Insurance – Covers vans and trucks transporting drying equipment and cleanup tools.
✔ Tools & Equipment Insurance – Covers dehumidifiers, fans, and water pumps from theft or damage.
💡 Did You Know? Many Colorado insurance companies require restoration contractors to carry at least $1M in general liability insurance before referring them to policyholders.
How to Reduce Insurance Costs for Water Damage Restoration Contractors
🔹 Use moisture meters & thermal imaging to prevent lawsuits over incomplete drying.
🔹 Train employees on water damage safety to reduce workers’ comp claims.
🔹 Bundle general liability, auto, and workers’ comp policies to get better rates.
Final Thoughts
Water damage restoration contractors face major liability risks, but the right insurance coverage ensures your business stays protected from lawsuits, injuries, and property damage claims.
