Construction Insurance: Everything You Need to Know About Insuring Your Construction Business

1. Construction Insurance Everything You Need to Know About Insuring Your Construction Business

2. What does the policy cover? • Specialized construction equipment  • Construction contractors' professional liabilities • Injuries and accidents • Commercial vehicles • Unfinished contracts

3. What are the risks ? Some industry-specific risks are: • Damage or theft of specialized construction equipment • High risk of injury or accidents at construction sites • Damages to vehicles owned by the business • Risk of unpredicted natural calamities

4. How do these risks affect your business? • Damage to specialized construction equipment might delay your work and cause financial loss.  • A construction contractor is liable delay in construction. A case can be filed against the contractor for the same.  • A construction worker might break his leg while at a site. The company will have to pay for treatment and will also suffer loss of business income. 

5. What policies do you need? Let us go through some of the common insurance policies included in the construction insurance package. 

6. Builders Risk Insurance • Builders risk insuranceis a specialized insurance that protects buildings from damages while they are under construction.  • It covers the building against liabilities such as fire, wind, theft, and vandalism.  • This policy is a must for construction projects. • It does not cover acts of God (earthquakes, floods, or hurricane damages) unless the policyholder asks for specific endorsements. • A builder’s risk insurance policy covers the building until it is sold or occupied.

7. Business Owners Policy • A business owners policy is a combination of three essential commercial policies:  Commercial property, general liability, and business interruption.  • Construction business insurance provides blanket coverage for a business against damages to third parties due to business procedures, damages to the property that houses the business , and loss due to circumstances that hamper revenue flow .

8. Commercial General Liability Insurance • A commercial general liability policy is usually bundled in a BOP, but if you haven't opted for a BOP, you need to get this policy separately. • A construction general liability insurance protects a business from third-party claims arising from bodily injury, personal or property damage • It also protects businesses at-fault from third-party losses arising from business operations, processes, or on-premise accidents. • Construction liability is especially crucial for construction sites that deal with multiple hazardous equipment and processes. 

9. Commercial Property Insurance Commercial property policy protects your business premises from damages that might arise from fire, theft, vandalism or other named causes of losses.

10. Commercial Auto Insurance • A commercial auto policy is usually bundled in a BOP. However, if you haven't obtained a BOP and your business owns vehicles, then a commercial auto policy is a must.  • The construction industry makes extensive use of a variety of vehicles, ranging from trucks to haul materials to specialized construction equipment such as trailers or mixers. • A commercial auto policy indemnifies these vehicles for all covered liabilities.

11. Workers Compensation Insurance • Any business with three or more employees requires workers compensation insurance. • Workers compensation indemnifies your employees from injuries and deaths that might occur from work-related incidents. • It is especially crucial in the construction industry since there are several high-risk exposures that employees (especially construction workers) face.

12. Professional Liability Insurance • Professional liability policy protects your business against losses and lawsuits that might arise from errors or negligent professional advice.

13. Product Liability Insurance • A product liability policy protects you from loss and damages incurred when products you manufacture, or supply are used.  • This policy is a necessity if you manufacture or supply materials and products used in construction. 

14. Common exclusions  • Claims-made/claims-occurrence exclusions: • You can choose between a claims-made and claims-occurrence policy. • A claims-made policy insures against damages when claims occur and are made during the policy period. • A claims-occurrence policy insures against damages that occur when the policy is in force, regardless of the date of claim. 

15. Common exclusions • Contractor exclusions: Contractors that oversee high-risk construction work (such as demolition, earthwork, or exterior finishes) might not be covered under a standard CGL policy. • Pollution damage exclusions Certain construction insurance policies might specifically exclude pollution damage coverages. A special pollution liability coverage might be necessary in such a scenario.