Much like any other business, when you get into the construction business, many risks are involved. Unlike other businesses, it’s not just financial risk but a lot of damage and safety risk. Even after a building or venue is complete, the risks maintain. Use this list to understand why you must obtain a specific insurance policy and assess your options.
Why You Should Get Insurance for Your Construction Business
Firstly, there may be defects in construction or design. It is usually due to irresponsible documentation and poor planning. If documentation is unclear, the whole foundation of a building can be improper, making it very dangerous.
Next, be aware that the building is very dependent on natural weather. There may be delays due to unpredictable weather or other natural disasters, which are very costly. Lastly, any or all sorts of construction are prone to vandalism. Since buildings are out in the open, where anyone can pass by, there is always a danger of that sort of damage.
These dangers might all lead to significant losses in money and property. It is crucial to obtain building project insurance because of this.
Different Types of Construction Insurance Available
Before choosing a perfect insurance place, please research all the types of insurance plans available. Here you will get an idea of what insurance providers have to offer:
Business Vehicle Insurance
With any construction business, there is a lot of transportation necessary. Whether it’s taking your workers from the offsite or business meetings with clients, even if your crew is small, but you still have vehicles with the company’s title, you should ensure commercial vehicle coverage is in place.
There are some criteria to be aware of, however. There may be coverage gaps when a car is personally owned yet used for work. Ways are there always to avoid this if it does occur, but it is almost always in everyone’s best interest to title the car in the business’s name and have a commercial auto policy.
Equipment Insurance
Suppose your equipment is lost or stolen during construction, and your business has to invest in equipment again. Fortunately, the cost of repair or replacement for qualified equipment is covered by tools and equipment insurance.
This policy typically includes a wide range of less than five-year-old tools and equipment, including power tools and manual tools (such as saws, wrenches, and hammers) (drills, nail guns, and circular saws). Your insurance company will pay the cost to repair or replace your damaged, lost, or stolen tools up to the policy limit if you need to make a claim.
General Insurance
In your construction business, your general liability insurance protects you against personal harm and property loss that your operations as a business may cause to third parties.
Many construction liability insurance policies extend their coverage beyond claims for property damage or physical harm that arise during construction. Most of them include covering responsibility for ongoing and completed projects you are working on.
Completed operations liability is the area of your commercial general liability insurance that covers claims resulting from previous projects. Your liabilities will be covered, possibly for years after the project is finished.
How to Find the Best Insurance for Your Business
Make Your Budget
Firstly, you must set a budget according to your business size and priorities. Although each of the mentioned construction insurance policies is sold separately and has different coverage options, they are typically influenced by the same set of variables, which include:
- Your business’s credit history
- Size of your business
- Location of construction
- Coverage Limits
The price of the contractor insurance that is required for your construction business may vary depending on other criteria. The underwriter typically uses these variables to determine the risk involved in insuring the project, contractor, or business and the likelihood of a covered loss.
Risk Factor
It may sound pessimistic, but you must also consider the risk likelihood. Like in life insurance, you would be more willing to invest in it if you were sick, old, or generally concerned for your family’s safety after you were gone. In the same way, you could consider how likely it is that damage may occur to your project. If the risk is high, buying a high-coverage policy is wiser.
Law Requirements
In many areas, you must take up specific insurance policies by law. These are generally required to protect or work for the people around you. Such types of insurance may be pollution coverage and even worker compensation insurance. Depending on where you live and your governmental requirements, you must also consider these in your plan!
Conclusion
As you know, construction contractors come into the market with many risks. It is one of the industries with the highest rate of workplace accidents, having a high level of liability on the job site and being subject to claims for a construction defect. However, be aware that they can often be the most complex policies to obtain because of all the risk factors involved.
