The construction industry is undoubtedly a profitable one, but it also features many different types of risks and liabilities. Therefore, it’s essential for businesses in this industry to protect both themselves and the structures they work on. One highly effective way to do this is by acquiring construction insurance. Here is a close look at this form of protection.
Areas Of Coverage For Construction Insurance
The type of construction insurance required for a project generally depends on several factors, including your relationship to this project and whether you’re an individual or a business. Additionally, requirements for construction insurance often vary by state. Thus, be sure to always stay informed about state (and federal) laws and regulations regarding construction.
Coverage areas for construction insurance also typically vary depending on the insurer, the policies they offer, and your chosen limits and deductibles — which depend on your specific coverage needs. However, here are six areas of coverage commonly included in construction insurance policies:
General Liability Insurance
General liability coverage, also sometimes known as “contractor general liability” or “commercial general liability” (CGL) coverage, shields you from two primary types of claims: bodily injury and property damage. This includes coverage of medical expenses after onsite job-related injuries, damages to a customer’s property, or damage created by a product that you installed (i.e. faulty plumbing or other workmanship). Some CGL policies also offer protection against claims related to advertising injuries or defamation (slander).
Builders’ Risk Insurance
Also called “course of construction” (COC) insurance, builders’ risk coverage protects the buildings and other structures you work on during the construction period. Most COC insurance policies cover many different types of construction-related property, including foundations, building materials, temporary items (e.g. scaffolding), lawns and trees, and outdoor fixtures such as fences. Builders’ risk insurance typically covers your structures against damages resulting from vandalism, theft, or weather-related events.
As beneficial as builders’ risk insurance is, it doesn’t cover all types of building materials. If you routinely use more sophisticated construction equipment such as trailers and forklifts for your projects, you will benefit significantly from acquiring specialized equipment coverage. There is also a specific type of equipment coverage known as “inland marine insurance,” which in the construction industry mainly applies to tools and other equipment that developers and contractors use, including those in transit.
Commercial Auto Insurance
This type of insurance coverage, which is legally required in most states, is essential to carry if you or any of your employees regularly use commercial vehicles (cars, trucks, or vans) for construction work. Many commercial auto policies include liability coverage for damages to third parties and medical payments coverage. Some policies also include uninsured motorist coverage and protection against theft, vandalism, and natural disasters.
Workers’ Compensation Insurance
Also called “workmans’ comp, this type of insurance is designed to shield you as a contractor or business owner if one of your employees becomes injured or falls ill on a construction job. In these cases, workers’ compensation insurance generally covers the cost of medical bills, missed wages, and legal fees in the event of a lawsuit from your employee. Laws concerning requirements for workers’ comp vary by state, so be sure to check these for your location.
Also called “contract bonds” or “surety bonds,” construction bonds are designed to “guarantee” the completion of certain parts of a construction project. Common examples of construction bonds include payment bonds, which ensure that a contractor pays subcontractors, suppliers, and laborers, and subdivision bonds, which ensure to a city or another local municipality that you (the bond-holder) will build a structure by adhering to all local requirements and guidelines.
Get Construction Insurance From JMG
Reach out to the experts at JMG Insurance Agency for more information on the many areas of coverage for construction insurance. Since 1916, we have been dedicated to providing high-quality insurance solutions to clients throughout Connecticut, New Jersey, New York, Hawaii, and Massachusetts. As an independent agency, we work closely with several well-known and reliable insurance carriers.
If you work in the construction industry, you will benefit substantially from purchasing construction insurance, whether you’re a one-man operation or own a business with many employees. Our policies include two primary coverage areas: builders’ risk insurance and commercial and contractor general liability insurance.
The former coverage will shield your buildings against incidents of vandalism, theft, and storm damage, while the latter protects you against claims associated with faulty workmanship, job-related injuries, advertising injuries, and defamation. If you don’t carry construction insurance, you may likely struggle to obtain contracts and put your team and projects at risk.