The 2022 Guide to Contractor Insurance

What do you need to run a profitable construction business in 2022? Artisan contractors and smaller construction businesses face challenges that larger firms do not. But with the right planning and policies in place, you could arm yourself with the right tools to help you increase profits and reduce risks for 2022 and beyond.

Managing Construction Risks in 2022

In addition to the typical risks associated with running a small construction business, such as safety, financial, legal, and environmental risks, artisan contractors also need to have a plan in place for the unique risks that come from advancing technologies and the continued impact of a global pandemic.

Pandemic and Post-Pandemic Risks

The COVID-19 pandemic is still impacting industries and employers around the globe. COVID-19 continues to bring operational risk from labor shortages, workplace safety and prevention measures, disrupted supply chains, and vaccine mandates.

Cyber-Security and Data Management

As the construction industry adopts technology, the digital tools that help businesses run more efficiently, reduce costs, and improve safety also increase the need for data protection measures.

You may think the greatest cyber risk comes from some faceless hacker sitting in a dark room trying to break through your defenses. But what many businesses don't realize is an uninformed employee can be just as much of a threat. Company employees can unintentionally present a significant cyber risk, particularly when appropriate limits aren't in place for confidential information.

Data risk also comes from employees who load up mobile devices (smartphones, personal computers, tablets) with company documents and confidential information and take them to job sites or homes in the evening.

Intellectual Property Risks

Intellectual property lawsuits are an emerging risk impacting every industry, not just construction. Frivolous patent lawsuits brought on by "patent trolls"—companies that buy up patents and then threaten legal action for anyone infringing on that patent.

Many small businesses cave in the face of these lawsuits and agree to pay ongoing licensing fees or settle matters out of court to avoid spending years -- and millions of dollars -- fighting these lawsuits in court.

And that's a very profitable business model for these businesses, unfortunately.

You may not realize it, but you could be infringing on patents without even knowing it.

The Patent Office has a habit of issuing patents for ideas that are neither new nor revolutionary. These patents can be very broad, covering everyday or commonsense types of activities. Examples of patent lawsuits include activities such as "sales and distribution via electronic transactions" or the use of an automated system "for processing business and financial transactions."

In another example of patents that never should've been issued, beware using the "out of office" email responder, which was patented in 2017.

Contractors should consider the development of a defensive patent portfolio and a risk management insurance policy to protect themselves against patent infringement lawsuits, no matter how frivolous they might be.

Environmental Risks

Construction is a resource- and contaminant-heavy industry. It requires the extraction of raw materials, chemicals are used on-site, and fuel is burned by heavy machinery. Globally, the built environment generates 30% of total greenhouse gas emissions and construction uses 32% of the world's natural resources, according to the Chartered Institute of Building (CIOB).

Federal and local environmental regulations have been set forth to help reduce the environmental impact of the construction industry, leaving construction businesses at risk and in need of protection in case of a toxic breach, spill, leak, or other hazards.

Mitigating Construction Risks in 2022

Contractors can turn to their legal and insurance professionals to ensure contracts and insurance policies are in place to mitigate the unique risks of a technology-driven, pandemic-impacted world.

Contractor insurance policies protect you against losses from the day-to-day risks of running a construction business. You may already have many of these in place, such as:

  • General liability insurance
  • Workers' compensation insurance
  • Commercial auto insurance
  • Course of construction (aka builders risk) insurance
  • Tools and equipment coverage
  • Commercial property insurance

Be sure to talk to your insurance provider about additional policies that can protect you against loss in 2022, including:

The construction industry will always be heavy on risks. Reassessing your risks each year and creating a plan to mitigate and insure against those risks is key to the survival and success of your construction business. Don’t get caught unaware by a risk you didn’t see coming -- work with your insurance broker today to make sure you’re prepared for everything 2022 may throw your way.




Newsletter Signup

Aegis Insurance Markets Logo in White
An InterWest Insurance Services LLC Affiliate

40169 Truckee Airport Rd. Ste #203
Truckee, California 96161
Phone (800) 579-6369
Fax (530) 582-6007
License #0B01094