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Owning and operating a business in the construction industry is often exciting, challenging, and rewarding. It also comes with added responsibility and accountability. Every contractor strives to perform at a high level for their customers. Still, a client may think you’ve under-delivered or even wronged them in some way. In the event this happens, are you doing everything you can to protect your business?
Many contractors today are still formed as a sole proprietorship or a partnership. These types of business owners put not only their business but their personal assets at risk as well. A general liability policy will help protect you and your business against financial disaster. It is generally the main coverage needed to protect a construction business and its owner(s).
Even if you formed a limited liability corporation (LLC), it’s possible to be held liable as the owner of the contracting business. Signing a personal guarantee or operating irresponsibly is just a couple of potential problems. Comprehensive general liability will protect against:
This includes legal defense and settlements up to the limits of the policy.
Having general liability insurance is another way to foster trust with your clients. If they believe you take your projects seriously and invest in protecting them it may increase the likelihood of being hired.
Here are some examples of why you might need different insurance(s) to protect your business:
Example #1: You get in a car accident on the way to a job site and your car is totaled. On top of that, many of your tools were smashed. Your commercial auto and inland marine insurance coverage can help cover the costs of replacing your car and equipment.
Example #2: A fire starts at the construction project you're working at and the home is severely damaged. Builder's Risk Insurance helps cover the cost to replace the damaged building.
Example #3: The superintendent of your company falls off the roof at a job site. He hurts his back and breaks his arm. Because you invested in workers' compensation insurance, his lost wages and medical costs are covered.
Quite a few construction professionals should consider construction insurance:
These are some policies to consider alongside general liability insurance as part of your construction insurance package:
Other construction insurances coverage construction businesses might want to consider include:
A Construction bond (also referred to as a ‘surety bond’) guarantees that the work your construction company is doing will be completed correctly in the right time frame. There are surety companies that back these bonds and will pay damages if the bonds are broken (but you still owe them whatever they pay). What are the common types of construction bonds?
One way to look at a construction bond is as a line of credit. If something were to happen on a project that you don't have the means to pay for or cover immediately, a bond provides immediate coverage while you pay them back.
Figuring out what coverage to have in place and what limits are needed is a real balancing act. On one hand, proper insurance for construction companies is necessary to reduce the risk. On the other hand, unaffordable and unrealistic premiums are also not in your best interest as a business owner.
Once you know what questions to ask, it’s much easier to select optimal construction business insurance coverage and general liability insurance limits. It’s also important to understand that construction a company’s insurance rates will vary depending on your business’s needs and the work your construction business performs. The key is to work with a licensed insurance professional you trust to develop a comprehensive insurance package for your construction business.
Insurance for contractors doesn't have to be expensive. The right insurance agent can help construction businesses find affordable construction insurance at an affordable cost. Connect with one of our agents by completing the form at the top of the page. Or, give us a call at 1-877-907-5267.
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