No matter your size or scope of business, construction sites present numerous risks. Therefore, all contractors should carry a wide variety of policies to protect themselves and their work sites.
This typically includes both commercial and contractor general liability coverage as well as business interruption coverage. You can often save money by opting for an all-in-one policy that offers both features.
General Liability
Risk of bodily injury and property damage poses a significant threat to any construction business, with potential for large settlements necessitating general liability insurance as an essential policy for contractors. General liability coverage serves to mitigate these risks; in fact, contracts typically require them.
Construction work often necessitates transporting equipment, tools and supplies from one jobsite to the next, necessitating an inland marine insurance policy to cover items in transit and not yet at their final destinations. Such coverage can either be purchased per project or under an overall master policy program.
Workers’ compensation provides medical expenses and lost wages coverage to employees injured while on the job, while architects and engineers need professional liability coverage in case someone alleges negligence in their designs. For larger construction projects, wrap insurance policies (also called master policies or consolidated policies) provide liability and workers’ compensation coverage for all parties involved ensuring that projects continue even if one subcontractor stops paying their workers or goes bankrupt.
Contractors working on large commercial or public projects often manage dozens or even hundreds of subcontractors, which requires them to remain vigilant about ensuring all necessary insurance policies have been in effect for each subcontractor. Under certain conditions, it may be possible to secure an additional insured endorsement on a subcontractor policy in order to provide secondary liability protection for the principal general contractor. Protection like this is especially useful for those relying on subcontractors for essential services like electrical or plumbing work. Contractor insurance policies are an absolute necessity for most contractors and may also be mandated in contracts for specific projects. Owners will often only award contracts to bidders who can demonstrate they possess adequate coverage – making this an efficient way of quickly selecting qualified bidders.
Commercial Property
Every year, thousands of construction projects across the country present unique risks to workers, stakeholders, and building companies alike. To mitigate such dangers with various forms of coverage.
No matter the scale or scope of a building project, commercial property insurance provides valuable protection from financial loss due to damage done to properties used for business operations such as buildings, equipment and tools in transit. It’s an invaluable form of coverage for those running their own construction company or renting power tools temporarily elsewhere than their primary location.
Construction professionals need general liability insurance in order to protect themselves against claims that result from third-party property damage or personal injuries caused by their work, which could otherwise become financially crippling for contractors without it. Without such coverage, contractors could face lawsuits that threaten to bankrupt them completely.
Workers’ compensation is another essential form of construction insurance, providing reimbursement to employees injured while on the job site. Most states mandate it for construction businesses that employ people. Furthermore, commercial auto policies cover any vehicles owned or used by construction businesses.
Contractor license bonds are similar to insurance policies in that they guarantee that a contractor will comply with regulations associated with their license, protecting anyone doing business with them from potential financial loss due to dishonesty or fraud committed by the contractor.
Contractors working in the construction industry rely heavily on expensive machinery that may be difficult and expensive to repair or replace in case it’s stolen or damaged, thus necessitating an insurance policy for construction tools and machinery as an essential form of inland marine coverage.
Errors and Omissions (E&O), also known as professional liability insurance, is an essential form of construction insurance for design-build firms to protect themselves against claims from clients that their services didn’t meet certain standards. E&O policies also protect architects, engineers, and other design professionals who may need it as a form of protection.
Commercial Auto
Construction involves heavy machinery and many people working together, which increases the risk of accidents that result in third-party damages. Due to these risks, many contractors carry workers’ compensation insurance for their employees – this policy covers medical bills and lost wages for employees injured on the job while depending on your state of residency, it could even include death benefits should an incident result in fatality.
Commercial auto insurance is another essential form of coverage essential to construction companies and contractors, typically included as part of a business owners policy (BOP). Commercial auto policies cover vehicles used during business activities like trucks or vans as well as any rented or borrowed ones used for hauling equipment from project sites to your offices. Due to being larger and faster than personal cars, they pose more of a risk for damage; so for this reason alone it is often wiser to keep them separate from personal policies.
Inland marine insurance can be extremely helpful for construction businesses. Similar to ocean-bound property insurance, but covering other forms of equipment and materials as well. Contractors need this kind of protection in case something happens while their materials are in transit or storage.
Consider purchasing a surety bond for your company to ensure any contractually agreed work will get completed if financial issues arise and affect your business. This may become especially relevant when working on projects for government agencies or larger firms which mandate that such coverage exists.
Construction insurance can be complex and overwhelming, with various coverage options to consider. Therefore, it is crucial that you speak to an expert risk advisor who can guide your decisions on which policies are right for your company.
Builders Risk
Builders risk insurance is an essential element of construction coverage for builders and contractors working on new building projects, protecting against perils that could endanger unfinished buildings, such as theft of materials, wind or fire damage. Damaged structures cost owners valuable revenue that cannot be generated until completion. Typically required by contractors for commercial projects but may also be recommended when adding onto existing structures.
Builder’s risk policies typically cover construction equipment and materials stored onsite or offsite for storage and transit purposes as well as the costs of clearing away debris and contaminants from sites. Furthermore, these policies can even provide coverage against flooding and earthquake damage if specifically endorsed.
Contractors acquiring builders risk insurance should carefully examine policy limits, deductibles and exclusions to make sure it fulfills contractual obligations. Furthermore, it is crucial that all relevant parties be included as additional insureds on the policy; this means naming both the property owner as primary policyholder as well as all subcontractors and suppliers who take part in construction processes as additional insureds on their policy.
Another important consideration when purchasing builders risk insurance is policy duration. If the project will take an extended period, a blanket policy might provide comprehensive protection through all stages of development.
Insurance premiums for contractors tend to vary based on the types of coverage purchased and their experience in the industry, however there are several steps contractors can take to keep costs under control. First and foremost is shopping around and comparing quotes from multiple providers so as to get the best policy at an affordable price. Furthermore, working with an industry veteran or broker who understands risks involved with specific construction projects makes finding policies tailored specifically for each client much simpler.
