Did you know that workplace injuries cost companies a staggering $1 billion every week? The construction industry spends over 70% more on worker’s compensation compared to other industries. It’s vital for your construction business to have the right insurance policies.
Construction job sites are always bustling with activities, numerous workers, and heavy machinery. This makes the industry inherent with risks. These injuries open up doors to injuries, damages, and possible litigation. The thing is, there is no one-size-fits-all insurance policy that would mitigate all these risks.
You need several of them to cover all these bases. In this post, we’ll guide you through eight different types of construction insurance policies. We’ll help you understand why you need them.
- Builder’s Risk Insurance
Also known as the course of construction insurance builders insurance covers the buildings or structures under construction. Essentially, the insurance policy covers foundations and temporary structures like scaffolding. It also covers building materials, paving, outdoor fixtures, and fencing.
Most insurance companies cover common types of construction projects. Builders risk insurance protects structures from damages caused by fire, vandalism, and weather. Generally, flooding and earthquakes are not included. But you specifically ask for an added policy.
- Contractor and Commercial General Liability Insurance
All businesses require general liability cover. In the case of a construction company, you need a contractor general liability insurance.
This policy covers any damages to the property or bodily harm during the course of the project. If you or a product you installed causes damage to a client’s property, general liability will cover it.
For instance, if you install faulty plumbing. However, it’s imperative for you to understand that the policy will not cover professional negligence. It will cover advertising injury or defamation, faulty workmanship, and job-related injuries.
- Professional Liability Insurance
Professional liability insurance is among the popular types of construction insurance policies and it covers possible professional mistakes. It could be design errors or engineering modifications that cause major issues to the project.
This policy covers any mistakes that could cause a financial impact on a construction project. However, it’s important to know that it only covers the cost of the errors and not the cost of reworking.
- Pollution Liability Insurance
Pollution liability is exactly what it sounds like. It’ll cover your business if you’re liable for a pollution incident from your job site. If, for instance, you have fuel tanks for refueling your machinery at the site, they pose a pollution risk.
Most general liability policies include pollution coverage. But having a standalone policy will ensure that you’re sufficiently covered. Of course, you should assess your need for the policy and your level of risk before getting one.
It may be possible to combine a pollution cover with a professional liability policy. So check with the insurance company.
- Business Vehicle and Commercial Auto Insurance
Regardless of how many business vehicles you have, as long as they are titled to the business, you need to have a business auto insurance policy. Using a personal vehicle for business purposes usually creates coverage gaps. It’s better to title it under business and get a commercial auto policy instead.
A commercial vehicle policy is intended to help your business from high auto repair costs. And any medical expenses or lawsuits that result from auto accidents.
You can pick one from several auto insurance covers. They include liability coverage, physical damage coverage, and uninsured motorist coverage.
- Inland Marine Insurance
Inland marine insurance is quite broad, but one of the most essential types of construction insurance. While it was initially designed for ocean-bound materials, it covers numerous aspects.
Inbound insurance covers property in transit. Also, those in the custody of storage facilities, and those used in different locations. It may also cover digital equipment and information as well.
Inland marine insurance covers the construction equipment and tools developers and contractors use. For this reason, this policy may also be referred to as the “tool and equipment insurance policy.” The policy covers mobile equipment like cranes, forklifts, and loaders. It also covers computer equipment, and any other supplies used by the contractors.
The policy will cover any equipment damaged in transit, equipment stolen from the site, or those damaged by natural disasters or fire.
- Contractor License Bonds
Also known as surety bonds, these are agreements that are quite similar to insurance policies. These bonds are used to guarantee that the contractor working on a project will comply with regulations that apply to specific licenses. While this may not seem like an insurance policy, it’s designed to cover the public or anyone the contractor works with.
- Workers’ Compensation Insurance
Workers’ compensation insurance typically covers the employees. It protects the business from employees injured on the job. Employees can be injured in construction work.
The policy covers their medical expenses, ongoing recovery costs, missed income, legal fees, and funeral costs as the result of a fatality.
Construction injuries can cost your business tons of money. It’s essential that you subsequently improve safety measures. See to it that you reduce the number of injuries that happen, and minimize the severity of injuries that could result in lawsuits.
Bonus Policy: Cyber Insurance
Cybercrime has become quite prevalent and cyber insurance is becoming one of those necessary types of construction insurance policies. It’s crucial for you to protect your business data and client personal information. Construction companies are relying heavily on technology, just like numerous other industries.
You need to ensure you have the right cyber insurance policy. In the event of a data breach, your clients and vendors may accuse you of causing damages. At this point, a cyber insurance policy will protect your business.
The Most Essential Types of Construction Insurance
Truth be told, construction is a dangerous industry. To ensure that your business is sufficiently covered, these are some of the most important types of construction insurance policies you need. All these are geared towards minimizing risks and cover any costs when things go wrong.
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