The construction business is a risky one.
From on the job accidents to extreme weather, traffic collisions to vandalism, there is no shortage of possible ways for contractors to incur losses.
But with the right coverage in place, your construction business doesn’t have to lose money if the unexpected occurs.
Here are some of the most common ways contractors lose money when something goes bad - and the insurance policies that can help you keep yours.
5 Common Contractor Claims
While the high-risk field of construction is rife with opportunities for the unexpected to occur, these five claims are some of the most common.
1. Personal Injury or Property Damage
Regardless of our best intentions, accidents still happen. And in the construction business, accidents are bound to occur. When those accidents come in the form of a third-party (non-employee) injury or property damage, it can cost your business a lot.
For example, 10% of all liability claims are for slip and fall accidents, with the average price tag of $30,000. Is that an amount your business can afford to pay out?
Bodily Injury Claims
The owner of a home you’re remodeling stops by to see all the progress that you’ve made when she trips over the cord of a power tool left out by one of your workers, hurting her wrist and hitting her head, hard.
An ambulance ride and overnight stay in the hospital later, she is holding you responsible.
Property Damage Claims
One of your employees is backing your work truck into a client’s driveway to offload some materials. When he accidentally hits the gas pedal instead of the break, the truck zooms backward across the driveway and crashes through the living room.
Unfortunately, the owner had only contracted you to remodel her master bed and bath. Opening up her living room was not part of the contract. It may have been an accident, but this property damage is going to cost you.
With general liability insurance, you won’t have to foot the bill when job site accidents put you in the hot seat.
Contractor general liability will help cover:
- medical bills
- work time missed
- damage repairs
- damage replacement
If a lawsuit is brought against you for injuries or damages, contractor liability also helps pay for:
- judgments and damages you owe to the person suing your business
- attorney fees
- miscellaneous court costs, including evidence expenses
2. Worker Injury
Regardless of what profession you specialize in, on the job worker injuries are going to happen. Unfortunately, this is especially true in the high-risk industry of construction.
In 2016, there were 2.9 million workers hurt on the job with an average of 14 deaths every day.
More than 21% of those fatalities occurred in the construction industry.
Be prepared when a work accident occurs by carrying a workers’ compensation policy.
Workers Comp Claims
Your project manager is assisting another employee with roof repair when he loses his balance, sending them both tumbling to the ground.
Luckily, they both land in the grassy backyard rather than the paved drive out front. Unluckily, they both sustain injuries that require a trip to the doctor, and your manager is going to be out of commission while recovering from a neck injury.
Not only are there medical bills to cover, but there are also going to be wages lost by your project manager during his recovery period.
When an employee is injured or becomes sick on the job, workers’ comp insurance typically covers:
- medical bills
- lost wages
- rehabilitation on ongoing care
- funeral expenses and death benefits
Workers’ comp helps protect your business against the high cost of a lawsuit while assuring that your hardworking employees are protected, should they get hurt while working for you.
3. Traffic Accident
Not all businesses are on the go, but construction work is all about moving. Constantly on going from one job site to the next, contractors spend a lot of their day running supplies, checking progress, and working up bids.
Unfortunately, your personal auto coverage will likely not be enough to protect you if you’re using your car for business purposes.
Commercial Auto Claims
You’ve just finished up checking on a kitchen remodel your crew is working on and are on your way to complete a bid for a large home addition across town. At a green light, you gas it and go just as someone in cross traffic runs their red light, t-boning into your truck and sending you spinning.
Luckily there are no serious injuries. Unluckily, your truck is totaled. And the other guy is uninsured.
If your work truck – or other insured work vehicles – are involved in a traffic accident you’ll want to be sure you’re covered by commercial auto insurance.
Different types of commercial auto coverages include:
- Liability coverage - covers when you’re at fault for damage/ injuries of another
- Comprehensive & collision coverage - covers you for damage your vehicle when you’re at fault
- Uninsured/ underinsured motorists coverage - covers your injuries and property damage when other, at fault driver is un/underinsured.
- Medical payment - covers when your passenger is hurt
Make sure to cover all your bases when is comes to commercial auto insurance, and you’ll be covered no matter what kind of accident comes your way.
What Does Contractor General Liability Insurance Cover?
Discover what contractor general liability covers and how this essential insurance policy can protect your construction business.
Read Blog >>
4. Stolen Equipment
Your equipment makes your business run. Plain and simple. Without it, you’re at a standstill. So what happens if it is damaged or stolen when traveling between job sites?
Did you know that less than 25% of stolen construction equipment is recovered each year? What if your tools go missing? Can you afford to replace them?
Tools & Equipment Claims
It’s going to be a long day. On the way to your first job site, you stop at a coffee shop to grab the biggest coffee they have. When you come back out to your work truck, the backseat window is broken and your toolbelt is gone.
You’re on a tight deadline with this job as it is and you’re going to need all the tools in your belt or work can’t move forward.
Tools and equipment insurance is coverage for tools and equipment when they are away from your place of business, typically covering:
You have too much to lose without the things you need to make your business work. Tools and equipment coverage ensures that you won’t ever have to go without them.
5. Damage to Build in Progress
While a project still is underway, you have a lot to lose.
On the job site tools, equipment, materials, supplies, machinery, and the work you’ve invested your time into are all at risk. What happens if these valuables are damaged or go missing?
What could possibly go wrong during a build, you may ask? Wildfires, for one.
The CA wildfires in 2018 alone have reached losses at billions of dollars, and that was before the 3 fires began raging the first week of November.
The Camp Fire is moving very fast, burning at a rate of 80 football fields per minute.
Certainly, unfinished construction projects are in its path.
And the damage from fire and weather aren’t the only risks. Unfortunately, thieves and vandals frequent unmanned construction sites.
Can you afford to foot the bill for damage to your work equipment and unfinished project, should the unforeseen occur?
Builders Risk Claims
Done for the day, you lock up the fence enclosure around the job site, securing all the tools and equipment you’ll need to use again in the morning, including your backhoe.
In the morning, you find your lock cut, your backhoe overturned, and the rest of your tools smashed and scattered on the ground. Vandals had a field day and now work is stopped.
Builders risk insurance typically helps protect all of your investments at a job site from:
- damage to a structure in progress
- onsite theft
- damage from weather events
Whether you need help with cleanup and restart of a damaged project or replacement of important equipment, builders risk can help cover the costs so you don’t have to pay out of pocket for unforeseeable issues at a job site.
Contractor insurance is important to keeping your business afloat, moving forward, and flourishing. Be sure to have the essential insurance coverages that protect you from these common types of contractor insurance claims.