The world of insurance can be a maze, especially for contractors. With so many options and potential risks, knowing which policies are crucial for your business is essential. 2023 has seen a lot of changes to insurance and other contractor policies, and there are most likely only more to come. Read more about the 5 types of insurance that your business should look out for this year.
1. Builders Risk Insurance
Builders Risk Insurance, sometimes known as course of construction insurance, is a specialized form of inland marine insurance. It's designed to shield buildings and structures during the temporary time period in which they are under construction or renovation. This typically includes protection against damages from events like fires, theft, and certain weather-related incidents. When you've already invested money into building materials, the last thing you want is your financial investment in a project to go up in flames. Natural disasters, particularly in areas like California, can halt a project in its tracks.
With Builders Risk coverage, you won't have to worry about the cost of tearing down and starting over if something unexpected happens on a site while you're still in the middle of a project. Builders Risk Insurance ensures that financial setbacks from unforeseen events don't derail the entire project, offering peace of mind to all.
2. General Liability Insurance
General Liability Insurance is one of the most common forms of insurance and is the first line of defense against common third-party claims. It encompasses protection against bodily injuries, property damage, and even advertising claims like defamation. With the construction industry already inherently risky, protecting your business against lawsuits and claims should be a high priority. Having general liability coverage in place is step one. From potential accidents on-site to property damage claims, contractors are constantly exposed to liabilities. You may not be required by law to carry GL for your business, but some states may require you to disclose to clients whether or not you have this essential coverage. California Business & Professions Code §7159.3 states that your contract includes a notice of commercial general liability insurance, which tells your potential client if you do (or do not) have coverage in place. General liability acts as a safety net, ensuring one significant claim doesn't jeopardize the entire business.
Get a no-obligation quote for general liability insurance today.
3. Errors & Omissions/Professional Liability Insurance
Errors & Operations (E&O), or Professional Liability Insurance, is tailored for professionals who offer advice or services, like contractors. It safeguards against claims arising from errors, omissions, or negligence in the course of business operations. With the construction industry being so intricate, minor oversights on projects can lead to significant structural issues and safety concerns/liability down the line. Information is more readily available these days too, leading more and more clients to become aware of discrepancies and perceived errors and possibly seeking litigation. Professional Liability Insurance acts as a buffer to these claims, ensuring that the contractor's financial stability isn't immediately threatened if a client believes a mistake was made.
4. Inland Marine Insurance
Although its name might not suggest it, Inland Marine Insurance is designed to cover materials, tools, and equipment being transported over land. This places protections on your tools and equipment whenever you are required to transfer them from your warehouse or office to the job site. Logistics in construction are complex, and often, jobs will have equipment traversing long distances multiple times a day. Sometimes these deliveries are rushed, causing the movement and transportation of everything to be potentially risky. Issues of theft, damage, or loss can occur so it's important to ensure that you, your supplies, and your team are covered throughout their journey.
5. Commercial Auto Insurance
Everyone should have auto insurance when operating a vehicle, which is especially important for vehicles your business owns or operates. Personal auto insurance does not cover vehicles used for business purposes, so if you get into a car accident on your way to a job site, or one of your employees is involved in a crash while transporting building materials to a project, you need commercial auto insurance in place to protect your business.
Overall, insurance isn't just about protection; it's about financial and business security. With the right policies, contractors can focus on what they do best, building and creating, without the constant worry of potential setbacks. As the industry continues to evolve, so do its risks and challenges. Staying informed and ensuring that you have the appropriate coverage tailored to your needs is crucial. Remember, it's not just about mitigating risks, but building a foundation for success. Always consult with a professional insurance advisor to make informed decisions about your coverage.