As a contractor, you likely know that your business is always at risk. Between the potential for accidents and injuries on the job site and the risk of lawsuits, it’s important to have insurance to protect yourself from financial losses, but what kind of insurance do you need? Here’s an overview of the most important types of insurance for contractors.
1. General Liability Insurance
This type of coverage will protect your company from various liabilities, including injury claims, and cover medical expenses. General liability also protects businesses if they cause damage to a customer’s property or if any product installations go awry, like faulty plumbing that causes leaking.
2. Builders Risk Insurance
Builders risk insurance is a type of coverage that applies to ongoing construction projects. While most insurance policies only cover completed structures, this type of insurance covers structures under construction.
The builder’s risk insurance policy is perfect for contractors who build structures under construction. The course of construction (COC) coverage can include anything from foundations and materials to temporary buildings, fencing, paving or outdoor fixtures, which are all necessary when constructing homes.
On average, the cost of builders risk insurance is between 1% to 4% of the project’s budget. For instance, if your construction budget is $500,000, the insurance premiums may cost between $5,000 and $20,000 depending on structure and insurance company.
This amount is normally spread over the construction period. If your project is estimated to last five months, you’ll pay about $1,000 to $4,000 per month in premiums.
3. Roofers Insurance
Roofing contractors are often at the top of a building, making them more susceptible to accidents. For this reason, they must take special precautions to protect themselves from accidents, and this means getting insurance coverage.
However, roofers insurance is not just about the physical risks of working at heights, but also covers accidents that can cause injury or property damage.
4. Professional Liability Insurance
The construction industry is not immune to mistakes, and they could lead to great financial losses. However, professional liability coverage helps protect against those mistakes that carry financial implications. This protection is an essential part of any construction project as it will cover mistakes made during design or value engineering on-site modifications.
5. Inland Marine Insurance
This type of coverage was originally designed for ocean-bound materials and vessels. However, today’s inland marine policies offer a wide range of property protection, including any property you have on-site, on transit or storage space at your work location.
With an inland marine insurance policy, you can file a claim for property that was stolen, damaged in transport, or damaged on site by fire or natural disaster.
Covered items include computers and data equipment, mobile equipment like cranes, forklifts, loaders, building equipment like hammers, electric saws, generators, drills and borrowed equipment.
6. Pollution Liability Insurance
Polluted air, water and soil are common in areas near power plants, refineries and construction sites where there is an increased risk that pollutants will escape into the ecosystem. This largely affects those who live nearby, leading to a lawsuit.
If you have equipment that creates risks to public health or the environment, this type of policy will cover any damages. The coverage protects both you and your company from being held liable if there’s an incident on the job site that creates pollution, such as with chemicals or fuel tanks.
7. Workers’ Compensation Insurance
The construction industry is a dangerous one, and it’s not only because of the injuries that could happen on-site but also the subsequent financial implications resulting from medical expenses and compensation. A workers’ compensation insurance policy protects those who suffer from work-related accidents financially, helping them get back on track after an injury while preventing lawsuits against the business.
8. Cyber Insurance
Cybersecurity threats are a growing concern today among businesses across all industries, especially those who rely heavily upon technology. A cyber crisis can affect your company and its data and that which you have access to through third-party vendors like smart technology or software platforms used on job sites to manage daily workflow. This kind of data and that of customers can be valuable to hackers if they get access to it.
With data being an integral part of a construction company’s success, cyber insurance protects everything from customer and employee information to work software.Cyber insurance coverage is generally inexpensive and provides peace of mind that your company’s information will remain safe from hackers or other online threats. Still, it is important to make sure you get the right type.
9. Commercial Auto Insurance
A construction contractor’s business is built on the wheels of their trucks. Without them, they wouldn’t pick up and move materials around or deliver products from one place to another. It’s recommended that you take care in making sure these vehicles are properly insured for protection against accidents.
A commercial auto policy covers cars and larger trucks like dump or cement trucks- anything really since your company could have many types throughout its fleet size over time depending upon what job sites need servicing.
If you have vehicles titled to the business, make sure they’re covered with a commercial auto policy. It helps businesses avoid high repair costs and medical expenses resulting from accidents.
The best way to protect your contractor business is to have a well-rounded insurance policy. Choosing the right coverage can be difficult, so you must look for an experienced agent who knows how to match all these types of insurance with your needs. This post has outlined nine of the best insurance types for contractors to get you started.