Understanding the types of construction insurance is indispensable because in the past year construction insurance costs increased, mainly due to material and skill shortages and global inflation. That is why construction professionals like builders and contractors need to have a closer look at budget management. They have to account for project-associated risks and mitigate them without affecting the overall cost.
However, to prevent financial losses and protect your company against various liabilities, it is super important to know all the types of construction insurance and policies. Do you know the main purpose? Well, a construction insurance policy works as a shield to protect construction professionals against fortuitous scenarios. Every project manager or owner wishes to complete the project within time and budget. But is only possible by having a good level of economic security through insurance. Now, let’s jump right into our topic and analyze how you can choose the right policy for your company.
PROTECT YOUR CONSTRUCTION INVESTMENT WITH THE RIGHT TYPES OF CONSTRUCTION INSURANCE COVERAGE, EXPLORE THE KEY TYPES OF CONSTRUCTION INSURANCE, AND ENSURE YOUR PROJECT IS SAFEGUARDED FROM UNEXPECTED RISKS!
WHAT ARE CONSTRUCTION PROJECT RISKS?
Do you know that all types of construction insurance protect against financial losses stemming from unexpected scenarios that occur during the project lifecycle? But, let us first show you which are the associated risks in the construction industry:
- Defects in the building design whether it is residential, commercial, or industrial are the most common project risk. It mainly occurs due to misunderstandings, poor performance, or unrealistic expectations.
- Bad weather conditions or defective equipment or tools can cause delays.
- The stolen construction items such as equipment or tools cause financial losses.
- On-site labour or worker injury and mishaps.
Factors Affecting Insurance Policy
The following are the factors that can affect the insurance policy:
- The kind and cost of the instruments and equipment you utilize
- The length of coverage you require
- The quantity of coverage you require
- How many staff do you have
- How risky is your industry?
- The magnitude of the jobs you work on
- Past experiences with business and insurance
Which Are The Main Types Of Construction Insurance?
Type# 1 General liability insurance
General liability insurance helps construction professionals protect from common issues and risks that companies have to face. Including:
- Third-party property consequences.
- Third-party physical injury.
- Copyright violations and other advertising injuries
For instance, if you face any of these issues, your commercial general liability policy will finance the cost of property repairs or any medical expenses. Damages to property or physical injury are the most common factor in the construction process. For this reason, it is important to have insurance as a backup to prevent budget overruns.
Type# 2 Workers’ compensation insurance
Workers’ compensation insurance covers medical costs and the lost pay of your workers. If they interact with any injury or illness, the insurance company will cover the expenses. Even if one of your workers gets injured and you do not have worker compensation insurance, you will be responsible for bearing medical expenses and lost wages. In addition to that, it also includes employer’s liability insurance, which helps pay for legal costs if an employee sues over unsafe working conditions.
Type# 3 Commercial Auto Insurance
Commercial auto insurance is another type of construction insurance that helps cover medical costs, legal costs, and property damages. Even if one of your company autos gets involved in an accident, as it is very expensive to cover its cost, an insurance policy funds it. Heavy vehicles such as trucks, bulldozers, boom lifts, forklifts, and more are used in construction projects.
Do you know most states in the US require construction businesses to have commercial auto insurance for their work vehicles? So, ensure that your policy encounters both state requirements and potential accident costs.
Type# 4 Builder’s Risk Insurance
Builder’s risk insurance covers the funds of a building while it is still under the construction process. The damages can be due to Fire, Weather, Vandalism, or any other reason. However, with the help of this type of insurance policy you will be stress-free in handling the damage costs before it is even fully executed. As a contractor or project manager, it is the best way to maintain peace of mind that your project will not run out of budget.
Type# 5 Contractor’s tools and equipment insurance
The contractor’s tools and equipment insurance covers the stolen, damaged, or lost tools. In construction-related work, repairing or replacing the tools can cost you in thousand dollars.
This type of policy covers a wide range of assets, from hand tools to heavy equipment like excavators and bulldozers. Moreover, this policy funds incidents both on and off the job site, offering protection wherever the tools are used!
Final Words!
However, remember one thing, whatever precautionary measure you take to protect your finances or to mitigate risks, insurance is the best thing that works as a shield. Just make sure to choose the right type of insurance policy according to the kind of work you do and the risk level of your project. If you are on a tight budget or you feel that it will empty your pockets, why don’t you get an expert opinion on construction insurance estimation? They will help you to give different viewpoints and help in cutting overall insurance costs.