General Contractor Insurance: Laying Your Foundations Right!

Running a construction company requires a substantial investment of time, manpower, and money. There are many risks that come with running a construction business, whether you are building a home or working on commercial properties. Thankfully, general contractors insurance is helpful for protecting yourself, your employees, and even your equipment from any dangers in the field.

Why is General Contractor Insurance Necessary?

A construction site is a place with a lot of heavy equipment and materials. Workplace accidents are widespread, and despite safety measures, accidents on construction sites occur often. And when accidents happen, they affect everyone involved.

According to a study by the National Safety Council, construction companies saw 79,660 non-fatal accidents in 2019. Additionally, in the same year there were 1,008 fatal injuries. Thus, having the correct general contractors insurance for your business is essential to protect yourself, your employees, and your business so that you can focus on your work responsibilities.

Who Needs General Contractor Insurance?

Given the number of risks in the construction industry, a general contractors insurance policy is advisable for the following careers:

• Contractors
• Sub-contractors
• Independent tradesmen
• Engineers
• Architects
• Project supervisors
• Estimators

What Policies Are Included in a General Contractor Insurance Package?

Business Owners Policy (BOP)

A business owners policy incorporates three basic policies: general liability, commercial property, and business interruption. It protects your business against the following types of claims:

• Bodily injury: An employee or piece of equipment injures a client
• Property damage: An employee accidentally damages some equipment
• Shutdown: Business interruption expenses and loss of income
• Lawsuit: Defense costs for slander and defamation

For example, suppose your workplace is flooded. BOP pays for the repair of the damaged property. It also compensates for the income lost while the business was temporarily shut down.

Professional Liability Insurance

A professional liability insurance policy covers the legal fees that arise from poor services, such as claim settlements. It provides the following coverage:

• Errors and oversights: Your client might sue you with the claim that your mistakes caused them financial difficulties. The policy covers the legal expenses associated with these claims.
• Failure to deliver promised services: Periodically, contractors aren’t able to finish their work on time. However, if the delay affects your client’s finances, then you could be facing a potential lawsuit.
• Negligent service: On occasion, a client can accuse you of providing negligent services. Nonetheless, professional liability can help with legal and attorney fees.

Builders Risk Insurance

Builders risk insurance covers damages to a property that is still under construction. The policy addresses any issues that occur while you are working on someone else’s property. It covers the following expenses:

• Vandalism: Someone could damage the property by breaking windows, spray painting, and destroying objects.
• Onsite theft: Thieves and robbers sometimes target construction sites for materials. Builders risk insurance covers stolen materials taken from the job site.
• Weather: The weather is beyond anyone’s control. Therefore, you should consider adding builders risk insurance to your general contractor insurance to cover damage from rain, hailstorm and other weather events.

Commercial General Liability Insurance (CGLI)

A commercial general liability insurance policy protects the business by covering customer injury, property damage, and related lawsuits. Given how the construction industry is risky for both contractors as well as customers, having this policy is important. The policy provides coverage in the following examples:

• Bodily injury: You leave equipment unattended, and the client injures themselves while trying to pass beside it. CGLI will pay for the medical costs.
• Property damage: Your employee damages a client’s furniture while working on the job site. CGLI will pay for the repair or replacement.
• Personal injury: Your company creates an advertisement that inadvertently mimics a competitor’s ad. They sue you for copyright infringement. CGLI will pay for the legal fees of the lawsuit.

Inland Marine Insurance

Inland marine insurance protects equipment and goods while it is in transit from one location to another. The policy is very beneficial for contractors who frequently move around with valuable tools and equipment. For instance, if a contractor loses their equipment from a job site while in transit due to an accident, inland marine insurance will cover the loss. This policy provides coverages for the following:

• Property that is in transit
• Goods you are holding for a client
• Tools and equipment that frequently move from one place to another.

Ocean Marine Insurance

An ocean marine insurance policy protects goods and shipments that cross international boundaries via large water bodies. Many general contractors import their goods and other equipment from overseas countries. While in transit, the container ships are always at risk from uncertain weather conditions. Therefore, adding this to your general contractor insurance is a must to protect your goods.

The policy covers the following:

• Loss of cargo: A collision causes some containers, full of your tools and equipment, to fall into the sea. The policy will cover the loss in this situation.
• Theft: If the ship with your equipment is attacked by pirates and the goods on board are stolen, then ocean marine insurance will cover for it.
• Damage to the hull: Due to severe weather, the ship containing your goods might sink. Ocean marine insurance will cover the losses in this scenario.

Business Interruption Insurance

A business interruption insurance policy covers any lost income when your business is temporarily shut down due to an unforeseen disaster. The policy is commonly bundled up with a BOP or commercial property insurance. It covers temporary business shutdowns due to the following:

• Fire hazards
• Theft
• Vandalism
• Windstorm

Commercial Property Insurance

Commercial property insurance protects a business’s assets such as office equipment, tools, and inventory. It covers damage to the business property in unpredictable events such as:

• Fire
• Explosions
• Theft
• Vandalism
• Riots
• Flood

Therefore, adding a commercial property insurance policy to your general contractors insurance will help you protect your business from these perils.

Commercial Auto Insurance

A commercial auto insurance policy provides protection when vehicles are stolen, vandalized, damaged, or involved in an accident. It covers the expenses for repair, replacement, and medical expenses for auto-related accidents. Hence, including this to your general contractor insurance covers you against the mentioned risks.

The policy provides coverage for:

• Property damage: When you accidentally damage another individual’s property with your automobile.
• Bodily injury: When you hit someone and they are injured or killed from the accident.
• Collison: When your vehicle hits an object or crashes into another car.

Workers Compensation Insurance

Workers compensation insurance is a type of insurance policy that represents a compromise between employer and employee regarding work-related injuries and illnesses.

The coverages of this policy are as follows:

• Medical benefits: Medical expenses for the treatment of work-related injuries. The CDC reports that the construction industry accounts for 51 percent of all fatal falls nationally.
• Income benefits: It pays for a part of an employee’s missed wages while they are recovering from an injury.
• Death benefits: Workers compensation pays out the lost wages of a deceased employee to the employee’s family. According to OSHA, one in five worker deaths happens in the construction industry.

Endorsements To Add To General Contractor Insurance

Depending on your business needs, you can include additional insurance coverages. Some additional endorsements to add to your general contractor insurance are as follows:

Contractors Equipment Insurance:

This policy protects valuable tools, equipment, machinery against any damages while on the job. Tools such as pumps, saws, compressors, and other portable equipment are a few examples of equipment that is covered.

Having this coverage included with your general contractors insurance is a reliable way to protect your tools and equipment.

Pollution Liability Insurance:

Pollution liability insurance helps to protect your business financially from legal fees, clean-up costs, and medical expenses associated with pollution caused by your work.

Contractual Liability Insurance:

A contractual liability insurance policy provides coverage for the liabilities which policyholders assume when they enter into a contract.

For example, if you have undertaken a government project, then the contract will likely stipulate that you are responsible for any injury on the construction site, despite it being government property. Since the liability falls on you and your business, the government will not be financially responsible.

How Much Does General Contractor Insurance Cost?

The cost of general contractor insurance depends on the following factors:

• Business location
• Number of employees
• General contracting services offered
• Business revenue
• Business equipment and tools

Searching for a policy that fits your need? We can pair you up with the best insurance carriers in your location.

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