Must Have Insurance Policies For Contractors

Leap | Carpenter | Kemps Insurance Agency | May 28, 2021 | minute read

The construction industry is always busy, but it’s also a business that has a lot of unique risks and challenges. Unlike many other ventures, construction requires a unique mix of highly skilled workers who need both expert knowledge and physical strength or dexterity, based on the job at hand. They are also subjected to risky situations on a daily basis because that is the nature of the industry, which means contractors will need more than the conventional policies for insurance that other businesses require. 

Liability Insurance

While it's fine to hope and strive for work and plans going off without a hitch, it is extremely unwise not to be prepared for the possibility that things may go wrong. Accidents can happen unexpectedly on a worksite at any time and can involve anyone. Liability insurance means that you have some kind of financial protection in place should a worker become injured and then place the blame on your business and attempt to sue for personal injury damages in a civil lawsuit.

Options such as Owners & Contractors Protective Liability Coverage exist so that independent contractors or subcontractors can purchase a policy that offers financial protection to the property and the business owner or general contractor who is doing the work. Never risk operating without liability insurance. If someone decides an injury or health concern is the fault of your company, there may be claims of negligence, demands for workers’ compensation, and an array of other financial complications that your company would be financially responsible for addressing.

Property Insurance

Property insurance is a fairly standard measure for any business, and construction is no exception. If you have any property that the company is based on, including the equipment in that office on your grounds, you'll need property insurance. You can't operate without computers, telephones, printers, an internet connection, and many of the typical pieces of mechanical and digital infrastructure that are required for a modern business.

However, where property insurance becomes unique for construction is with regards to "floaters." That is to say, equipment, gear, or other items that are technically considered the property of the company, which do not necessarily remain on company property in the same way that your office filing cabinet, telephone, or computer will. Generators that may need to be hauled on to a site, for example, in order to provide electricity for the lights and other powered gear, would be considered part of the company property. The same is true for the mechanical and power tools, or safety gear that needs to be transported to any worksite to ensure safe, orderly, and efficient work gets done.

Property insurance can even apply to a building that is under construction. Builder's risk insurance is a particular kind of "scaling insurance" that will provide financial protection up to what the building is currently "worth" if a claim is made. But this protection varies with project completion. In other words, if a building is only half-finished, liability may cover half the building's total expenses, whereas if a structure is about ¾ of the way to completion when an accident occurs, liability claims will cover ¾ of the building's overall worth. For any construction company that wants maximum peace of mind while working on a large scale product, this is a significant investment.

Business Vehicle Insurance

Ford truck headlight Finally, vehicle insurance is going to be essential, but this will take a specialized form. Having a car for a business to attend meetings is one thing. However, construction requires heavy vehicles and machinery, such as bulldozers, dump trucks, and cranes. They are all strictly for professional, heavy industrial purposes, not just for commuting or even carrying cargo.

Because these are a heavier class of vehicle with specific, industrial functions, they require a particular type of vehicle insurance to protect against conditions and circumstances that ordinary vehicles would never be subjected to. Don't expect that traditional auto insurance would provide any protection for an accident caused by or damage sustained to a bulldozer at a construction site. And keep in mind that any personal auto insurance is unlikely to cover the kind of liability amounts that would be involved in an industrial accident.

We Can Help

Contractors face a whole suite of risks, challenges and business factors unique to this dynamic industry. If you want to make sure that you have the information you need to make better insurance decisions, we can help to get you the protection you need. Contact one of our independent agents at 888.461.9635 for more assistance.

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About The Author

LCK Insurance Agency is one of California's most prominent independent insurance agencies. They offer commercial business insurance, employee benefits, life & health insurance, and personal insurance.

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