The construction sector consists of more than 650,000 companies that employ over six million workers and erect almost a trillion dollars’ worth of structures annually. But with this high volume comes the risk of employee injuries, equipment failures, lawsuits, and more — any of which can derail your project, reputation, and profits. Risk can be managed, but accidents will occasionally happen — and when they do, it’s important to be prepared.
Whether your focus is carpentry, plumbing, painting, or electrical, having the right insurance coverage is a critical step to protecting your employees and your business. In addition to “standard” coverages like workers compensation, commercial auto, general liability, and property, you may also need other kinds to address construction-specific risks, such as:
- Builder’s risk: This coverage can provide protection for your structures and materials during construction of new projects or renovations, from start to finish. Builder’s risk coverage insures against weather, theft, vandalism, and other relatively common sources of damage. Construction contracts usually require either the contractor or property owner to have a builder’s risk policy. Policy limits are typically based on the estimated total value of the completed structure.
- Contractor’s errors and omissions: If one of your contractor’s jobs in not up to standards, this insurance helps cover any claims made against your business as a result.
- Contractor’s equipment: This insurance protects the machinery and tools at job sites, while in storage, and during points in between. Your policy can cover a range of equipment, from cranes and cement mixers to small hand tools.
- Equipment breakdown: This policy covers the cost to repair or replace damaged equipment that your construction business relies on to get the job done. Your policy can also cover lost income during temporary shutdowns, extra expenses to continue your business while equipment is being fixed, or the lost value of spoiled or contaminated products.
- Installation floater: This policy covers the materials of your trade after they leave your business premises — from the moment they are loaded onto the truck until they are accepted at the job site, put to use, or installed.
- Owners and contractors protective (OCP) liability: If you hire independent contractors or subcontractors, you should require them to have OCP coverage. This stand-alone policy covers the insured (you) against property damage or bodily injury that is caused by contractors hired to work on your behalf. As the builder or project owner, you may not need to purchase this coverage, but it is available for your benefit.
- Surety bonds: Bonds aren’t exactly insurance policies, but they can help to ensure that clients, subcontractors, vendors, suppliers, and other impacted parties won’t be left high and dry if you face obstacles to project completion. If you’re unable to purchase equipment or materials, for example, a surety bond can provide the needed funds to keep your project on track.
- Umbrella: If an accident at your construction site caused serious injuries to nearby pedestrians, your business could face a lawsuit seeking $1 million or more. For a modest additional premium, umbrella insurance can help safeguard your business by providing an additional layer of protection over your existing commercial auto and general liability policies. Smaller businesses, which tend to be underinsured, can also benefit from umbrella coverage — otherwise, the out-of-pocket costs for a serious accident, injury, or lawsuit could seriously hurt your ability to continue your business.
Your coverage needs and limits will depend on your specific business. Use this list as a starting point for a conversation with your independent insurance agent or provider. Liberty Mutual Insurance, for example, has deep expertise in the construction industry, and can help ensure that your construction business is covered and capable of handling any situation — or project — that comes along.
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