The Importance of Construction Insurance

Insurance coverage protects your construction projects against loss, theft, and damage. It helps you maintain project progress and profitability.

Many contracts and local regulations require contractors to carry certain types of insurance. It also enables you to comply with legal requirements and safeguards your business.

General liability insurance is a must for all construction companies. A commercial auto policy will cover any company vehicles you use.

General Liability

A construction insurance policy is crucial for contractors to protect against potential losses. One of the most essential types of coverage is liability indemnity, which protects in the event of property damage or bodily injury. Insurance can be particularly beneficial in the construction sector, as accidents and incidents are more common due to the nature of the work involved. Contractors need to comprehend the intricacies of these policies to guarantee sufficient coverage for potential risks and liabilities.

A CGL policy is contractors’ leading liability insurance, and most construction contracts require that all contractors carry commercial general liability. Some also specify the CGL industry forms permitted and the minimum limits required. A per-project aggregate limit is an excellent addition to the CGL policy for projects likely to exceed limits set for each occurrence or aggregate value in the policy.

A Builder’s Risk Policy protects buildings under construction against named perils like fire, theft, and vandalism. Often, these policies will provide some protection for the contractors if they cause a loss, but the coverage is project-specific and not the contractors’ primary policy.

Equipment Insurance

Construction projects require significant investments in materials, equipment, and time. Protect these investments by purchasing equipment indemnity that will pay for repairs or replacement in the event of theft, damage, or loss.

Equipment insurance can also provide coverage if your company’s equipment accidentally damages public infrastructure, such as electricity, water, gas, and sewage lines. Often called tools and equipment or contractors floater insurance, this coverage is usually bundled into a business owner’s policy (BOP).

Like all types of insurance, rates depend on the equipment you want to be covered, its value, how much it travels between job sites and the deductibles you select. Choosing an insurer with familiarity with the construction industry and a good reputation for financial stability is also essential. The indemnity you purchase will help protect your business from potential risks and liabilities, allowing you to focus on building your clients’ dream homes.

Auto Insurance

There are many risks to consider when building a construction project, including natural disasters, accidents, third-party property damage, etc. This type of insurance protects your company from financial losses when these events occur.

If your business utilizes vehicles, it’s essential to have auto indemnity to protect you and your drivers. This coverage can cover vehicle repairs and medical expenses for injuries that may occur during a traffic accident.

Contractors’ all-risk insurance, or builder’s risk indemnity, offers a wide range of protection for your building projects. It protects against fire, wind, earthquakes, other natural disasters, theft, and other property damages. Often, these policies are combined with tools and equipment coverage and commercial auto coverage. It allows you to streamline your coverage by eliminating duplication.

Business Owners Policy (BOP)

A business owner policy (BOP) bundles general liability and commercial property insurance into one policy. The liability portion of a BOP covers lawsuits over third-party bodily injuries (for example, if someone trips over equipment or your employee writes a negative social media post).

Insurers offer a variety of property and liability limits in a BOP, depending on your risk level and industry. Business owners’ policies (BOPs) generally provide property and liability coverage and business interruption indemnity. If your business cannot operate due to a covered loss, business interruption insurance can cover the lost income and operating expenses while the business is closed. Eligible businesses include apartment buildings, offices, and mercantile risks with retail sales, wholesale operations, or service and processing activities (previously, risks involving manufacturing were ineligible for the BOP program). A business owner’s policy can help you build confidence in showing your property manager or major customers that your company has the proper protection.

Property Insurance

Although contractors are strongly encouraged to take all the necessary safety precautions, accidents can still happen. indemnity helps mitigate financial loss and shows clients you’re serious about your work.

Property insurance protects your construction materials, tools, and equipment from theft and damage while working on a project. Many projects require that contractors have this coverage to meet legal or contractual requirements.

It’s often cheaper to bundle general liability and commercial property indemnity into a business owner’s policy (BOP). This type of indemnity includes workers’ compensation, which covers employee injuries. Additionally, it can cover losses related to a temporary shutdown of your business. This is especially helpful if you must pay employees while your work is interrupted.