General contractors coordinate and supervise the work at construction sites from the initial development to the final product. They coordinate schedules, look after the hiring process, order tools and materials, and deal with subcontractors. General contractors face complex tasks that are both unique and dangerous.
General contractor insurance is the best bet to protect employees, subcontractors, tools, and equipment. Proper business insurance will help you win new clients as well as provide a sense of security as it protects you financially against any unexpected risks.
Why is general contractor insurance necessary?
Whether you are renovating a residential place or working on the construction of a commercial building, contractors insurance is necessary. Construction jobs take substantial investment. You need to be able to protect yourself, your employees, and tools and equipment from any risks that might arise while doing the business. Therefore, it is necessary to have general contractor insurance to protect your contracting business.
Workplace accidents are widespread, and construction site accidents occur far too often. Above all, even the best construction crew can make mistakes. A study by the National Safety Council showed that in 2018, companies lost 103,000,000 production days due to work-related injuries.
The correct insurance coverage allows you to focus on your job responsibilities without having to worry about financial protection.
If you’d like a general contractor insurance quote that is particular to your business, get in touch with us today!
Who needs general contractor insurance?
The construction industry is full of risks and accidents. So, contractors insurance is advisable for:
- Independent tradesman
- Project supervisors
- Engineer and architect
The Centre for Construction Research and Training states that accidents in the construction sites account for 6-9 percent of the project costs. Insurance helps to mitigate these costly expenses. Besides, general contractors and construction business owners require contractor insurance to work for specific businesses.
What policies are covered by general contractor insurance?
Business Owners Policy:
A business owners policy is a convenient policy that incorporates property and liability insurance into a single policy. It includes three basic policies: general liability, commercial property, and business interruption. It protects your business against claim of:
- Bodily injury: Sometimes employees might drop bricks, waste items while transferring them. Unfortunately, it might hit the client giving them minor injuries to head and brain injuries. According to the Bureau of Labor Statistics , there are roughly 150,000 construction site accident injuries each year.
- Property damage: An employee drops a screwdriver causing a dent in the hardwood floor.
- Business interruption expenses and loss of income
- Defense costs for slander and defamation
Example: A flood ruins your office. BOP pays for the repair of damaged properties. It also compensates for the loss of income while the business was interrupted.
Professional Liability Insurance:
The professional liability insurance covers the legal fees such as claim settlements, and judgments arising from poor service. It offers liability coverage concerning:
- Errors and oversights: Your clients might sue you, claiming that the mistakes that you committed caused them financial troubles. So, professional liability insurance covers the legal expenses associated with these claims.
- Failure to deliver promised services: Setbacks are common in the contractor industry. However, if these setbacks affect your client’s finances, you could face a lawsuit.
- Negligence in providing services: Sometimes a client can blame you for neglect even if you are not at fault. Nonetheless, professional liability can help with attorney fees, legal costs.
Builders Risk Insurance:
Builders risk insurance covers any damages caused to a property still under construction. Also known as the course of construction insurance, it addresses any bizarre risks that might occur while working on someone else’s property. It covers expenses arising from:
- Vandalism: Someone could deface or damage your property by spray painting, breaking windows, destroying fixtures.
- Onsite theft: Thieves often target construction sites. Builders risk insurance covers the stolen materials from the job site.
- Weather: You cannot control the weather, even with proper precautions. Therefore consider adding builders risk policy to general contractor policy to cover damages from rain, hailstorm, and other weather events.
Commercial General Liability (CGL) Insurance:
The construction industry poses many risks for contractors as well as the customers. General liability insurance protects the business over any customer injuries, damage, and related lawsuits. Moreover, commercial contracts and leases often require CGL. The coverage provided by this policy include:
- Bodily injury: You leave your tools unattended, and a client’s child injures themselves while playing with the sharp tools.
- Property damage: Your employee damages a client’s desk while remodeling. CGL pays the replacement cost.
- Personal injuries: While drinking after work, if one of your employees talks negatively about a client and the client hears about it, they could sue you for slander. So, make sure your construction contractor insurance includes CGL to cover such claims.
Inland Marine Insurance:
Inland marine insurance protects properties while in transit. It is very beneficial for contractors who frequently travel for work and carry valuable tools and equipment. For instance, if any contractor loses the machines from a vehicle or jobsite, inland marine insurance will cover the loss. This policy covers:
- Properties that are in transit.
- Goods you are holding on for a client.
- Tools that frequently move from one place to another.
Ocean Marine Insurance:
Ocean marine insurance protects goods that cross international borders as well as any domestic marine shipment. In this global economy, many general contractors import their tools and other equipment overseas. So, ocean marine insurance has become a critical insurance. It covers three properties: hull, freight, cargo, plus liability from oversight. This policy covers:
- Loss of cargo: A collision causes the container van to fall due to which your tools are misplaced.
According to a survey by National Public Radio, 10,000 shipping containers fall into the ocean every year.
- Loss of revenue: If someone steals your properties while it is in transit from your suppliers overseas, ocean marine insurance will cover for it.
- Damage to the hull: Due to bad weather, the ship containing your goods might sink or collide with an object.
Business Interruption Insurance:
Business income interruption insurance, also known as business interruption insurance, covers any lost income when your business is temporarily closed due to a covered peril. It is not sold on a standalone basis. But is bundled with BOP or commercial property insurance. Covered cause of loss might include:
Especially small businesses should make sure to add business interruption policy in their certificate of insurance.
Commercial Property Insurance:
Commercial property insurance protects a business’s assets such as inventory, office equipment, tools. It covers business property in case unpredictable events arise. Such events could be:
Hence, adding commercial property insurance to your building contractor’s insurance will help you protect your business from these perils.
Commercial Auto Insurance:
Commercial auto insurance provides protection when vehicles are vandalized, stolen, damaged, or involved in a collision. It covers the expenses for the repair and replacement and any medical expenses. Insurance Journal sites auto liability as to be the most challenging line in primary casualty for construction.
Commercial auto insurance provides coverages for:
- Property damage: Commercial auto insurance covers when you accidentally damage someone’s property.
- Bodily injury: If you hit someone and they retain damages or die from the accident.
- Collision: When your vehicle hits an object or crashes into another car, commercial auto insurance covers for it.
Workers Compensation Insurance:
Workers compensation insurance represents a compromise between employees and employers about work-related illnesses and injuries.
There are many instances where an employee in the construction industry could hurt himself during their work. According to Insurance Information Institute, 15 percent of workers compensation insurance goes to employees that were injured in a construction site. So, general contractors need workers compensation to avoid their employees suing them for such work-related injuries. The coverages include:
- Medical Benefits: It covers any medical expenses to treat a work-related injury. Centers for Disease Control and Prevention reports that the construction industry accounts for 51 percent of all fatal falls in the country.
- Income Benefits: It pays a part of the employee’s missed wages.
- Death Benefit – Workers compensation pays lost wages to the family of an employee killed on the job. According to OSHA, annually one in five workers’ deaths is in the construction industry.
- Burial Benefit – It pays a part of funeral costs.
What are some endorsements you can add to construction insurance?
You can include additional insurance coverages as per your business need. Your insurance agency or insurance company can help you get right amount of insurance coverage. Some of the endorsements are as follows:
1. Contractors’ equipment insurance:
This insurance protects valuable tools and machinery against any damages while on the job. These tools include saws, pumps, compressors, and other portable equipment. This policy provides coverage for:
- Small tools
- Machinery less than five years old
- Mobile equipment
2. Pollution liability insurance:
Pollution liability insurance helps to protect your business financially from any clean-up costs, legal fees, and provides coverage for medical expenses. Although you can add pollution insurance to auto or general liability, it is better to buy it as a standalone policy.
3. Contractual Liability Insurance:
Contractual liability insurance provides a claim against liabilities that policyholders assume when entering into a contract.
For example, if you have undertaken a state government’s project, they require you to be responsible if someone gets injured in the construction site. Since you have agreed to take the liability and indemnify the state, the state government will not be guilty.
How much does general contractor insurance cost?
Many factors impact the general contractor insurance costs. These include: