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Last Updated on January 24, 2023 by John Patterson
Insurance is essential for every type of business. As far as the construction business is concerned, many different types of insurance were designed to protect the contractors, owners, and developers through every stage of the construction process.
In case you didn’t know, specific construction insurance policies are necessary for various projects. Remember that you must obtain this to avoid stress caused by multiple unforeseen occurrences.
Now, if you’re relatively new to this, yet you are yearning to get familiar with all types of insurance when it comes to construction, then keep reading so you can determine what type of insurance is most appropriate for your firm.
Most Common Types of Construction Insurance Coverage
Builders Risk Insurance
This type of insurance is also known as COC (course of construction insurance), and it represents insurance coverage for different structures, like buildings, while under construction.
Remember that other policies, such as commercial property insurance, usually do not cover structures during construction. On the other hand, this type of insurance typically comes with policies that cover these types of properties:
⮚ Lawns, trees, and plants that the builder installed
⮚ Building materials
⮚ Paving, outdoor fixtures, and fencing
⮚ Temporary structures, like scaffolding
Furthermore, in most cases, insurance providers cover some of the most common types of construction projects, such as:
- a) Residential remodeling or some smaller projects (replacing doors or windows)
- b) Residential new construction
- c) Commercial property construction
- d) Model home contents and model homes
Suppose, by any chance, your type of structure or construction project is somewhat unique. In that case, you will still be able to come across specialty providers that can provide you with insurance policies for your particular project.
On the other hand, builders’ risk policies mainly protect you against specific types of damages that were caused by:
Generally speaking, insurers will suggest “premium coverage” solutions that are a bit pricier; however, they can expand the coverage restrictions, insurable property for the policy, and insurable occurrences. If all of this sounds appealing to you, go here to get it, and in time, you’ll figure out if this is something that you truly need or not. If not, you can always consider some other alternatives.
General Liability Insurance
What does this represent? Namely, this type of insurance coverage represents a comprehensive insurance policy that will protect your company from two causes of third-party lawsuits: property damage and injuries.
Your construction firm may have a regular office where all your clients, potential clients, suppliers, and many others come and go whenever something needs to be done. This type of insurance protects these people whenever they are in your company.
If something goes wrong, for instance, they get injured (faulty furniture, slips, falls, trips, etc.), and your company is perceived as responsible, general liability insurance will cover all medical expenses and legal costs.
The same rule applies to construction sites where various accidents can also lead to injuries. Furthermore, suppose your construction operations negatively affect the third-party property, or you’re charged with severe physical damage. In that case, this type of insurance coverage will aid in dealing with potential legal costs and replacement/repair expenses.
Is There Anything Else That Wasn’t Mentioned Above?
Business Vehicle & Commercial Car Insurance
It doesn’t matter whether your construction company owns a lot of vehicles or not; the reality is that you still have a plethora of vehicles that are linked to your firm; hence you want to do everything that’s in your power to ensure you have a commercial auto policy in place.
Don’t forget that owning any vehicle and employing it for business purposes could still create coverage gaps. Therefore, it’s always advisable to title your vehicles under the firm name and make sure you’ve acquired a commercial auto policy.
So what can you insure? Commercial vehicles can be insured, ranging from automobiles and trucks to oversized vehicles, such as dump trucks, tractor-trailers, and cement trucks. Now, if the vehicle has to be licensed for road use where your business operates, it should be put on a commercial auto policy.
The only exception is a yard truck because it never leaves your company’s premises.
Moving On To Inland Marine Insurance
Back in the day, this type of insurance was used when products were first transported by ships and required protection. In the meantime, things have changed a bit, and now it covers installation floaters, contractor’s equipment, and rigger’s liability.
Additionally, this insurance coverage covers your construction property when it is moved from your company to other locations. Now, bear in mind that this policy doesn’t only cover your property on the worksite.
But it also covers anything stolen or potentially lost before it reaches the construction site. Furthermore, it covers various types of property, for instance:
- Contractor’s tools, clothing, equipment, and supplies (drills, hammers, electric saws, generators, drywall, and wood)
- Borrowed or leased equipment (leased tools or mobile equipment, such as forklifts and electric generators)
- Portable equipment, for example, cranes, excavators, loaders, and forklifts
- Computer equipment and data (desktop computers, laptops, private project data, and tablets)
Umbrella Liability Coverage
This insurance policy is utilized mainly by more prominent contractors who run large construction sites. Moreover, umbrella liability coverage is frequently a supplement to CGL because CGL policy has maximum restrictions that generally do not cover all of the contractor’s liability.
In these types of situations, an umbrella liability coverage is going to offer a range for any amounts that are beyond the CGL policy’s limits.
Determining the type of insurance coverage you need can be a bit overwhelming because you first must identify all potential risks associated with the projects you’ll be working on to ensure that the policy terms can cover all possible losses. To figure that out, we suggest carefully going through everything written here.