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Construction Insurance Coverage: 5 Policies You Should Never Be Without


From Thompson Insurance, Inc. blog

There’s no denying it. If you’re in construction, you’re in a high hazard industry with a range of exposures for which you need to be properly protected. Regardless of the fact that you’ve worked so hard to create a culture of safety and compliance by establishing a thorough safety program, there are some accidents that just can’t be avoided no matter how hard you try.

Whether you’re in remodeling or home building, have 50 employees or one, the only way to truly manage the risks you face each day is through proper insurance coverage and sufficient policy limits. While some exposures may vary from contractor to contractor and project to project, there are certain policies that just about all businesses in the construction industry will always need.

Without the five policies below, if something were to happen, more than likely, you’d be kissing your profits goodbye, or worse, have to pay out of pocket for those unforeseen expenses.

#1 Commercial General Liability Insurance. Your general liability policy is going to protect you from claims of bodily injury, personal/ advertising injury, property damage, and products/ completed operations, as well as pay legal or medical bills that may arise from these claims.

Bodily injury includes any injury, sickness, disease or death suffered by a person while property damage includes physical damage to property or loss of that property.

Another note, you want to make sure you request “Per Project” Aggregate Limits of insurance rather than “Per Policy” Aggregate Limits. Per Policy Limits represent the most your insurer will pay for the total of all claims occurring during your policy term – Typically $2,000,000. A Per Project Aggregate Limit means the insurer will pay the same $2,000,000 for all claims that occur from any specific project. This is important because contractors will often have multiple jobs going on at any one time.

#2 Builders Risk Insurance. Typically, the general contractor or owner of the project is required to purchase this policy that’s going to cover the structure while under construction as well as any materials that are on site or being transported.

These most commonly cover fires, lightning, hail, explosions, vandalism and wind damage.

#3 Commercial Auto Insurance. Auto insurance claims are on the rise thanks to distracted driving (our cell phones being the main culprit), and no, your drivers aren’t exempt. Whether you’re hauling tools and equipment or getting your drivers from point A to point B, without sufficient limits in place, one accident could mean a massive amount of money straight out of your pocket.

According to Automotive Fleet, the average cost of a loss related to fleet vehicle accidents is approximately $70,000, which is almost twice the cost of the average workplace injury.

#4 Worker’s Compensation. As the industry continues to bring in older, less nimble workers, as well as younger, less experienced ones, the chances for an injury on the jobsite remain higher than ever. According to the latest data from the Bureau of Labor Statistics, there were a total of 5,147 fatal work injuries recorded in the United States in 2017.

Worker’s compensation is going to cover medical bills and treatment as well as lost pay if an employee is to suffer injury, illness, or death on the job. Although most businesses are required to have it, the more hazards your workers face, the more coverage you should consider.

#5 Commercial Umbrella Insurance. For those working on larger construction sites, umbrella coverage is absolutely necessary and almost always required; you just need to make sure those limits are where they need to be. In the event that your general liability limits or Auto Liability are exceeded, your umbrella is going to kick in to cover those costs. And when a serious incident occurs, this is a policy you don’t want to be without.

Working in construction means you face a variety of hazards on the job every single day, and unfortunately, regardless of how well you train and educate your employees, there’s always the chance of an incident occurring that’s simply beyond your control. The fact of the matter is that having certain insurance policies is not only smart, but essential, in order to protect yourself, your workers, and your business.

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