Construction business is big business and so is the risk. As a general contractor, one of the things you want to make sure of is to protect your business against liabilities. But it is not always easy. Although you may be very careful to prevent damage to your client’s property during the phase of the project; the client may get into harm too.
Having a solid contractor insurance policy can help you limit the financial expenses that tend to be incurred when you damage your client’s property. It also comes in handy when you want to protect your work equipment and on-the-site injuries.
What is Contractor Insurance?
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Also called “General Contractor Insurance,” it is a type of insurance policy protecting general contractors against financial losses during a construction project. The policy also covers your firm or business against claims made by people who may have been negatively affected by your firm while working on the project.
This is one of the best insurance policies for construction firms looking to mitigate risks and possibly, cut down on work-related expenses over risk exposure.
Types of Contractor Insurance
There is no one way to protect yourself with contractor insurance in the United States. It is advised that you have one or more of these insurance policies, as they protect you from different kinds of construction-related risks.
The most common types of contractor insurance are:
1. General Liability Contractor Insurance
This type of contractor insurance protects your business in three (3) major ways, viz:
Third-Party Bodily Injury
If you or any of your employees cause bodily injury to a third-party (someone who is not a part of your construction team), the coverage extends to them.
In this case, the policy covers your business against any claims made by the third party who is affected. It may also cover the costs of defending your firm in a court of law, assuming the third party decides to take the legal route.
Damage to Property
If you or your employee damages the property of your client or the building property belonging to others, the general liability insurance covers it too.
Protection from Legal Fees
When a third party or even your client gets attacked or feels bad over your activity during work, he or she may file a lawsuit alleging either property damage or personal injury. In that case, your general liability contractor insurance covers the legal fees for such a lawsuit.
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2. Course of Construction Insurance
This type of contractor insurance covers all the parties concerned in the course of a building project. These parties include:
- The construction firm
- The project owner/client.
- The equipment owner
Also, the Course of Construction Insurance covers certain damages that may be triggered while working on a building project. It also covers the loss or theft of the equipment and materials used for the project.
Most of the time, building projects under renovation or new construction are covered by insurance.
The Course of Construction Insurance is also known as “Builder’s Risk Insurance.”
3. Inland Marine Insurance
This type of contractor insurance protects building properties (materials and equipment) while they are being transported. The protection is often paired with the Course of Construction Insurance (Builder’s Risk Insurance).
The protection is mostly for building properties transported by land either by train or truck.
4. Workers’ Compensation Insurance
If your general construction company is not limited to you, the worker’s compensation insurance is needed. This type of contractor insurance covers both you (the business owner) and your employees.
The employees or workers receive most of the coverage because the insurance policy covers their lost time wages and medical bills if they are sick or hurt on the job.
5. Roofer’s Insurance
The risk of falling off a ladder is higher, considering the height of the roof from the floor. This is why the roofer’s insurance is very essential for every general construction business owner.
The policy protects the roofers working with your construction firm. That way, you don’t get to foot the bills for property damage caused by the roofers or personal injury to your roofers.
6. Commercial Automobile Insurance
Company-owned vehicles are also protected under contractor insurance. If your company vehicle gets involved in an accident, vandalized, or stolen in the course of doing business, the commercial auto insurance protects it.
The protection also extends to personal injuries or property damage incurred with the vehicle.
Benefits of Contractor Insurance for U.S. Construction Firms
With general contractor insurance, you get to reap the following benefits:
- Financial protection for your general construction against bankruptcy especially when facing multiple lawsuits.
- Contractor insurance is required by law in some states. Without this, you may be unable to get the license to offer general construction services in your desired location.
- The insurance protects you from damages and injuries arising from completed building projects.
- The coverage extends to lawsuits and claims instituted by third parties present on the building property while you are working.
General contractor insurance protects your construction company and reduces the risks of being dragged to the court of law over damages to building properties or personal injuries to employees and third parties. The costs or expenses that come with this will quickly mount up and your business will soon be in debt. But with the right contractor insurance policy, your business will be protected and you will focus on the main business of providing valuable construction services to your clients.