Protecting your construction company with proper insurance is crucial to having long-term success in the business. As skilled as you may be in your job, there are always circumstances beyond your control. If something goes wrong on your construction site, you’ll want to protect your profits, staff, and investments through insurance policies. Here are common policies that construction insurance companies offer:
Builder’s Risk Insurance
Construction sites are susceptible to sustaining damages because areas are exposed and unfinished. For example, fire alarms and sprinkler systems may not be in place when a fire begins. Builder’s risk insurance is a property insurance for buildings under construction that aims to mitigate potential damages such as those from a fire, high winds, explosion, or theft. An important distinction to make is that builder’s risk insurance only covers the structure and materials that will become part of the building once completed.
When planning your level of insurance you’ll want to look at the overall building costs and the anticipated project length. You’ll want to have coverage begin from the time construction materials appear on the site. The coverage will continue until whichever situation occurs first: the policy expires, the site is sold, or the site is occupied by tenants.
Typically, builder’s risk insurance does not cover larger perils such as earthquakes or flooding in a beach zone. Extensions may be made to the coverage, but that will require you to have a more in-depth conversation with your insurance company. Accidents and injuries on the job site aren’t covered by builder’s risk insurance which is why you’ll also want the next type of insurance as well.
Worker’s compensation is not exclusive to the construction industry, however, it is vital because of the nature of construction sites. Whether your employees are working with heavy equipment or toxic materials such as asbestos, you’ll want to protect their health with worker’s compensation.
Should an employee fall sick or be injured on the job and not be compensated for their time away from work, they could sue the contracting company. Worker’s compensation covers any court costs and settlements that may occur. This type of policy is mandatory in every state, but the specific requirements vary for each state so you’ll want to speak further with your insurance company about which policy is best for your construction site.
Commercial General Liability Insurance/Umbrella Insurance
Commercial General Liability Insurance (CBL) is a third-party insurance. In this situation one person, typically the senior person in charge of safety on the job site, is responsible for paying for the CBL. They become the first party in the policy while the insurance company becomes the second party. The insurance protects a third party, which may be the owner or upper-tier contractor should they be sued. Often lawsuits of this type are filed when there is a breakdown of the contract between owner, general contractor, and sub-contractor.
Along with liability insurance, a construction company may want to look at having an umbrella policy. Such a policy can be purchased after other policies are in place. This particular insurance takes effect when other policy limits are maxed out due to a large lawsuit. Construction sites have a lot of moving pieces and an umbrella policy protects you against large legal settlements which could otherwise be financially devastating.
Heavy Equipment Insurance
While builder’s risk insurance protects the building and its materials, heavy equipment insurance protects the construction company’s equipment being used on the job site. Heavy equipment is targeted by crime rings, and they know that construction sites are an easy place to steal from. Some tips to prevent theft include rendering heavy equipment immobile and placing company labels in visible locations. However, even if you are diligent with tracking your equipment, having heavy equipment insurance is necessary to protect your assets. Construction equipment is expensive and theft can put a construction project behind schedule.
Other insurances may be necessary for your construction site depending on the scope of your project. Also consider pollution insurance, umbrella insurance, and commercial automobile insurance in addition to the mainstream policies explained above. Whether you are protecting your building materials, staff, or equipment, make sure you are prepared when it comes to ensuring the longevity of your business.
Make sure you have the insurance coverage you need to protect your construction business’s bottom line with help from Allied Insurance Brokers. Since 1982, our construction insurance experts have delivered results-driven solutions to help drive efficiency through risk management, loss control and asset protection. Contact Allied Insurance Brokers today, and discover how we can lower your total insurance cost while improving your bottom line.
*Allied does not deem this blog entry as a complete and thorough listing or overview of the above topic, and does not recommend it be primarily relied on. It only highlights some common issues and resolutions. For a thorough overview, please contact Allied’s Risk Engineering Division.