Construction professionals tackle some of the riskiest jobs. Like any other business owner, the right insurance policies will help protect you from financial losses if anything goes wrong. But, unlike other business owners, contractors face specialized risks that need specialized coverage.
After all, your employees are climbing on rooftops clutching pneumatic roofing nail guns… not making froth art for cappuccinos.
Is your contractor insurance built to protect you?
Here are five must-have contractor insurance policies to have in place for your construction business in 2020.
#1: General Liability Insurance
The foundation of a well-built insurance package, general liability insurance provides financial coverage for you if a third-party suffers an injury or other loss.
Let’s imagine someone walking by a construction site trips on an extension cord running across the sidewalk. General liability insurance is designed to cover the costs of their medical bills so you don’t have to.
General liability typically covers most claims, settlements, legal defense, and judgments, up to the amount of coverage you have.
Work with your insurance agent to choose the right limits for your business’s risks. Depending on the type of work you do, you may consider adding an umbrella liability insurance policy to extend this coverage even further.
#2: Course of Construction Insurance
Also known as builders risk, course of construction protects owners and contractors from damage that occurs on a project during construction. This may include risks from flooding to fires or theft.
As a contractor, you know you can’t monitor the job site every day and night, leaving it at risk for vandalism and theft.
Or picture this…
An errant cigarette butt is flung into some nearby landscaping. A tiny ember sparks a small flame in the bark, which soon becomes a large fire, engulfing your build and destroying the work you’ve completed along with materials you’ve installed.
Builders risk insurance helps ensure you won’t have to take a loss to repair, rebuild, and replace work, materials, or equipment damaged during the course of construction.
What is Course of Construction Insurance?
Course of construction insurance protects your investment in an active project from events such as vandalism, fire, theft, and natural disaster.
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#3: Inland Marine Insurance
Also called tools and equipment insurance, inland marine insurance is a must-have if you store or move materials, tools, and/ or equipment to and from job sites.
Designed to cover your investment in tools that are on the move, tools and equipment insurance protects against losses from tools and equipment that is lost, stolen, or damaged.
If your tools are stolen out of your truck or off of a job site, go missing after you’ve loaned them to a crew member, or get damaged by vandals, tools and equipment policies are designed to cover it.
#4: Commercial Auto Insurance
Your work vehicle is so much more than just a method of transportation. It doubles as an office space, a lunch room, a tool storage facility, and then some.
And on its off days, it may even work double duty as a personal vehicle: transporting kids to soccer games, grocery-go-getting, and taking your spouse to date night.
Don’t get caught relying on personal insurance to protect your hard working contractor vehicles.
Any vehicle that is used in the operation of your business will need commercial auto coverage. Commercial auto insurance is also needed for any autos owned by — and considered an asset of — your company.
#5: Pollution Liability Insurance
Here’s an insurance policy that isn’t needed in every line of business: pollution liability insurance.
As a contractor, you likely handle environmental hazards regularly. Paint fumes, welding fumes, mold, bacteria, asbestos...the pollution risk is high in the construction industry.
Pollution liability insurance is designed to provide coverage for third-party injuries and property damage, as well as defense and clean-up, resulting from a pollution condition caused by your work. Or the work of a subcontractor performed on your behalf.
Pollution can mean many things, including spilled fuel. Because of the difficulties of construction sites, it can be very important to have this coverage.
And, for most large-scale projects, the property owner or project manager may require it.
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Is Your Construction Business Protected?
This list covers many of the risks you’re likely to face as a business owner in the construction industry, but it’s only the start.
You may have specific insurance needs based on your unique construction business, including workers compensation insurance if you have employees. (For some contractors, such as roofers, you may even need workers comp if you work alone.)
Talk to your insurance professional about the benefit of these five insurance policies for your contractor business, and to find out what other policies you need to fully protect yourself from the risk of financial loss as you look ahead to build your business in 2020.