Comprehensive insurance coverage might seem like a luxury for many contractors. After all, you’re likely dealing with rising costs from supply chain uncertainties, tariff-impacted materials prices and a tight labor market. However, these conditions make financial protection more important than ever.
We can help you put together the optimal insurance mix tailored to your construction company’s circumstances. But in the meantime, here are nine essential policy types to consider if you don’t have them and to review carefully if you do:
1. General liability. Sometimes called comprehensive general liability, this coverage kicks in when your business is sued for bodily injury, property damage or personal injury allegedly caused by your operations. For example, it may cover claims of defamation or invasion of privacy. General liability policies are sometimes required by law or under some contracts.
2. Commercial property. This type of insurance provides coverage if you suffer qualifying losses to your owned or rented building, tools, furniture, inventory or equipment. Generally, such losses must arise from fire, burglary, theft, wind or lightning. A policy pays part or all of the costs to repair or replace business property damaged by a covered occurrence.
3. Business interruption. This policy will compensate you for income lost if you’re forced to suspend normal operations because of physical damage to your property or a civil order requiring your business to close. It also typically covers losses from specified natural disasters, theft and vandalism, but excludes those caused by events such as epidemics and viral or bacterial contamination.
Note: Many insurers allow you to bundle general liability, commercial property and business interruption insurance into a single policy known as a business owner’s policy.
4. Commercial auto. Does your construction company use vehicles as part of its operations? If so, you’re probably aware that personal auto coverage generally won’t cover accidents that occur while a vehicle is being driven to or from a jobsite, used to make equipment or materials deliveries, or operated for some other business purpose. Commercial auto — or commercial truck, for large vehicles such as dump trucks and cement mixers — usually covers accidents, as well as theft, damage from natural disasters and vandalism.
5. Cyberliability. Hackers don’t restrict their nefarious activities to large corporations, financial firms and health care systems. Any business that collects and stores sensitive data can be targeted — and that includes construction companies. Cyberliability insurance generally covers regulatory fines and penalties, litigation expenses, and response costs. For instance, it may cover investigating incidents and notifying customers affected by a data breach.
6. Builder’s risk. Also known as cost of construction coverage, these typically short-term policies apply to buildings and other structures undergoing development, construction or renovation. A policy may also cover equipment and machinery used in the process, as well as temporary structures (such as scaffolding), paving, fencing and new landscaping.
Coverage generally applies only to damage caused by fire, weather, theft or vandalism. Damage from earthquakes or flooding is usually excluded. Many project owners have builder’s risk insurance, so contractors may not always need to buy it.
7. Errors and omissions (E&O). Also known as professional liability insurance, this type of coverage may sound like it’s intended for doctors or lawyers. However, any business that might be confronted by an unsatisfied customer claiming the company made mistakes while providing services should consider it. E&O insurance is typically limited to financial damages, with claims for property damage or bodily injury falling under general liability insurance.
8. Inland marine. This type of coverage usually applies to equipment, tools and movable materials that are stolen or damaged in transit, on a jobsite or in storage. It may apply to mobile equipment (such as forklifts and cranes), leased equipment and computer equipment (for example, laptops and tablets). The insurance generally provides replacement cost or actual cash value and may also cover related costs, such as those resulting from project delays caused by a covered incident.
9. Wrap-up. These policies — whether owner-controlled or contractor-controlled — are typically applicable to large construction projects. Wrap-up insurance is designed to provide sweeping coverage that:
- Shields the owner, general contractor and subcontractors, and
- Bridges gaps that can arise when all these parties buy individual liability policies.
It can include general liability, builders’ risk, pollution liability, commercial vehicle and other types of coverage — all in a single policy. With such extensive protection, though, wrap-up insurance often comes with a hefty price tag.
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