Inside a Contractor’s Insurance Toolbox

Whether you’re a plumber, carpenter, roofer, electrician, or a general contractor, the projects you work on are fraught with various risks. Before bidding on a project or going to work on a new build, renovation, or repair, check that your tools, equipment, and materials are all ready to go and ensure your insurance program covers your exposures.

Your construction insurance toolbox should include:

General Liability Insurance

Required contractually for most projects, a General Liability policy protects your company and assets against claims of bodily injury, property damage, products and completed operations, and personal injury. Typical construction claims involve slips, trips, and falls on the job site.

For example, let’s say you are working on a residential property. One of your subcontractors leaves a pile of construction materials in a common area that lacks sufficient signage and barriers. A visitor to the worksite, such as a neighbor or a delivery person, trips over the materials and sustains injuries, which result in medical treatment and a lawsuit. General Liability insurance may help cover the legal fees, medical expenses, and damages awarded in a lawsuit, up to the policy limit.

Builder’s Risk Insurance

Covers damage to a building or structure under construction due to losses resulting from fire, vandalism, and theft. The policy may include coverage for materials, equipment, and fixtures. It’s a temporary policy and is in effect during construction or renovation, typically for a period of 3, 6, 9, or 12 months.

Workers’ Compensation Insurance

Required in the majority of jurisdictions, this policy provides coverage for medical expenses and lost wages if an employee is injured on the job. It also protects you from being sued by an injured employee.

Contractor’s Tools and Equipment Insurance

You rely on your specialized tools to get the work done, so if they’re damaged or stolen, replacing them immediately is your priority to avoid project delays. This policy insures tools and equipment while in transit against theft, damage, or loss, which can be quite costly if you don’t have coverage.

Contractor’s Professional Liability Insurance

Protects you against claims of negligence, errors, or omissions in professional services. This is crucial for contractors who provide design or consulting services.

For example, let’s say you’re hired to manage the construction of a commercial building and the contract specifies a completion date to meet the client’s business needs. You’re responsible for overseeing various subcontractors, scheduling, and ensuring that the project is completed on time and within budget. Unfortunately, you encounter unexpected delays and permit issues. The completion date is extended, causing financial losses for the client, who then sues for financial damages alleging negligence in managing the project and meeting the agreed-upon completion date. Contractor’s Professional Liability insurance may provide coverage for legal defense and pay for the financial losses up to the policy limits if you’re found responsible.

Contractor’s Pollution Liability Insurance

Covers pollution-related damages, such as accidental spills or releases of pollutants that occur during construction.

Additionally, there are other policies you may need like Commercial Auto, Excess Liability, and Equipment Breakdown.

Make sure you’re prepared for the risks generated by the work you perform.

 

*NOTE: The insuring agreement in a policy sets out the covered perils, assumed risks, and nature of coverage that the insurance company provides to its insured in exchange for the premiums paid. Thus, the terms and conditions of the policy will dictate whether coverage exists and the nature of any potential benefits.