Your construction company is shielded from the dangers of lawsuit, accidents on the job, damaged equipment, and other perils when it carries contractor insurance. It is possible that you will be required to acquire this coverage either by law or by the company that employed you.
Although most business insurance plans can be obtained from the same insurer, it is recommended that contractors obtain a variety of policies to protect themselves against the varied risks they face. Here is how you may find the most economical insurance for your contractor business.
What are the ins and outs of having a Contractor risk insurance policy?
A builder’s risk insurance policy is temporary and covers projects that are still in the construction of being constructed, in contrast to ordinary property insurance, which covers finished buildings and the contents of such buildings.
Although it is unlikely that you will want this particular form of insurance while your project is being constructed, we strongly suggest that you study your policy and consult with an agent if you have any questions or require clarification regarding specific aspects of your property.
When appropriately preparing for events of this nature, there are typically several distinct aspects or concerns to take into consideration.
It does not matter what kind of construction project you have in the works; you must always make sure that your company is adequately protected by purchasing sufficient insurance coverage.
Because insurance companies view new constructions and renovations as carrying a larger risk than other types of projects, it may be in your best interest to purchase building risk insurance before beginning any of these types of work.
This covers any losses that come from a property becoming unable to fulfill its function as a consequence of an unexpected incident such as flood damage or significant weather changes; even claims resulting from miscellaneous activities could potentially be covered depending on the specifics of the policy.
Inquire in advance with your agent about whether or if clients and property owners may also have coverage policies that can protect your business from liability.
Contractor Insurance: Who Needs It?
In order to execute work for certain firms and entities, general contractors, subcontractors, and construction industry owners are frequently required to hold insurance. Contractors have particular requirements based on their profession, and we can assist you in developing the finest insurance plans for your specific needs.
What is covered and excluded in builder’s risk insurance?
Builder’s risk coverage varies based upon which provider you go with and the type of construction project you have going on in your area.
Most policies only cover natural disasters that might occur that are beyond your control. Still, some policies can also be structured around insurance for defects and damages as well as failures or losses related to the architecture and design work as well.
General liability insurance for contractors
Third-party bodily harm, property damage, and other business liabilities In the event of a lawsuit, your general contractor may need you to acquire general liability insurance to protect your company and others on the project.
If you spill paint on a client’s one-of-a-kind rug, for example, the customer may sue you for the cost of repairing it. Your litigation and settlement fees may be covered by general liability insurance.
Builder’s risk insurance
Fire, weather disasters, vandalism, or other dangers cause damage or loss to structures during construction or renovation.
Builder’s risk insurance can cover the expense of replacing windows in a house your firm is building if they are smashed during a windstorm.
Workers’ compensation insurance
Employees that get hurt or become ill while on the job. Almost every state mandates that companies provide workers’ compensation insurance to their employees.
Workers’ compensation would pay your employee’s medical bills if they fell off a ladder while painting a house and broke an arm.
Professional liability insurance
Claims brought against your company for service faults or oversights, violation of contract, professional negligence, or failing to deliver on time.
Your professional liability coverage would cover litigation and settlement fees if a customer sued your general contractor for missing a building project deadline.
How much does contractor insurance cost?
According to the business insurance marketplace Iowa Contractor Insurance, the cost of contractor insurance can add up to as much as $595 per month.
However, it’s important to note that this is only an estimate based upon purchasing multiple individual policies. You may not need all that coverage as a single contractor running your own business.
The cost of business insurance can vary widely depending on how big your business is, where you’re located and if you have filed claims in the past. The larger a policy is or, the lower the deductible is, the more expensive it will be.
Coverage also varies between Buildings vs. Structures
When discussing your builder’s risk insurance options, be sure to note how the policy defines a building.
An occupied building is designed for habitation, such as a house or an apartment complex. However, not all structures are considered buildings. A temporary structure, like scaffolding, will not be inhabited and does not make up the bulk of your policy limits.
If a contract has you covered for anything outside of the actual building, there may be areas where you fall through the cracks if asked to file a claim.
Talk to your insurance agent to understand the details of your builder’s risk policy and when coverage ends.
What types of contractors insurance are available?
Contractor insurance comes in a variety of forms. Here are some popular independent contractor insurance policies.
- General liability insurance for contractors
Is your business covered in case of injury, damage to property, or loss due to a lawsuit? In most cases, you may need your general contractor to carry liability insurance as collateral for damages incurred on the job.
You should find out, what type of insurance your general contractors are required by law to carry. For example, you may need people to sign off on legal documents like a lien waiver stating they shall not keep possession of your property unless they’re paid first before having those rights transferred elsewhere.
Sometimes it comes down to how formal the project is because some contractors may require that the subcontractors and suppliers they work with also get their liability insurance.
- Inland marine insurance
Business property that is damaged, lost, or stolen while it’s being transported in a truck between two landscaping jobs appears to be covered by property insurance counterparts. Still, when you look at details like the fact that most theft occurs when the vehicle is either at rest or parked, you’ll realize that your business’s loss is not covered.
The same would apply for any non-vehicular transport, such as a flight from California to Alaska and a natural disaster headed your way. Stranded in the airport? Your inland marine liability policy will pay for a rental car for getting back to basecamp.
- Builder’s risk insurance
Damage or loss from fire, weather events, and other hazards is one of the many concerns with construction or renovation.
No matter what the cause of the damage, builder’s risk insurance covers damages to your property by fire, weather events, and other hazards. For example, if a storm causes your windows to break, you can count on the builder’s risk coverage for their replacement.
- Workers’ compensation insurance
Employed workers who are injured or get sick while on the job. Almost every state requires employers to have workers’ compensation for their employees.
- Commercial auto insurance
Business vehicles can take a surprising amount of stress when you’re out and about for appointments, meetings, or anywhere you need to drive.
Suppose your van is pulling a trailer loaded with vital equipment. In that case, it can be easy to overlook the possibility of having an accident on the road that would damage either your vehicle or the goods being transported in it.
When this sort of thing eventually does happen, it’s going to feel both devastating and expensive – precisely why commercial auto insurance exists!
So if you’re planning on driving around with expensive goods inside, then sticking business insurance on top of your existing personal policy might be worth considering if anything were to happen while you were on the move!
- Professional liability insurance
If a client claims that you missed the construction deadline for their project, your professional liability policy will cover legal and financial costs associated with a settlement or verdict.
Where can you get contractor insurance?
Contractors’ insurance coverage are available from a variety of insurance firms. Which firm is ideal for you is determined by how soon you need to shop.
If you want immediate coverage, consider the following options:
You may utilize Thimble to ensure that other contractors have insurance that meets your standards if you’re the one employing them. If you’re a contractor in need of coverage, Thimble can help you find a temporary or continuous policy.
Next provides insurance packages for everyone from drywall contractors to welders if you want coverage specific to your industry. You can share digital certificates of insurance with clients and contractors who request them once you purchase a policy.
Nationwide’s contractor insurance may be a suitable option if you want to tailor your policy, such as establishing a per-project policy limit or adding environmental coverage, which is typically excluded from commercial general liability plans. Construction bonds are also available through Nationwide.
If you need a business owner’s policy, The Hartford has one with a variety of contractor-specific features, including as coverage for your tools and equipment and protection against damage to the property you’re working on.
Construction All Risks insurance is a collection of policies that protect the insured’s temporary and permanent works (on the project), tools, equipment, and construction machinery against any unanticipated and abrupt physical loss or damage caused by any cause other than those explicitly excluded. The policy also provides Third Party Liability coverage, which protects you against legal liability for losses caused by the contract’s fulfillment.
Iowa Contractor Insurance‘s agents helped builders and contractors find the right coverage at the best price. In addition, they can answer your questions and provide guidance to protect your business.