Construction work is among the riskiest jobs in the United States. Hazards present on the construction site include heavy equipment, falling debris, sharp objects, tall heights, toxic chemicals, and exposed electrical wires. Without a proper safety risk assessment, there’s a high chance that accidents may occur at the job site. 

Since the construction industry is prone to accidents, contractors should get insurance to protect their businesses from financial losses and lawsuits and give assistance to affected workers and third parties if accidents happen. 

This blog article will tell you about the things you must know about insurance if you’re a contractor. 

The Importance of Getting an Insurance

At both state and federal levels, a construction company or contractor is obliged to insure its workers before acquiring a business license. Compliance with the law is essential for its business operation to run smoothly.

The benefit for contractors in getting insurance is financial backup against injuries or fatalities caused by construction-related accidents. Having insurance protects contractors from lawsuits and financial burdens caused by such unexpected emergencies.  

Types of Insurance Contractors Should Get

It’s recommended that contractors should acquire these six types of insurance. 

General Liability Insurance

This insurance policy covers expenses related to property damage and third-party physical injuries at the job site. 

For example, if you damage a client’s furniture during renovation, a general liability policy can help cover the cost of replacement or repair. Or, if a client or visitor gets injured from fallen debris at the jobsite, the blame may fall on the contractor. You may have to pay for medical and legal expenses if the person sues. 

Workers’ Compensation Insurance

This insurance policy gives benefits to employees who get injured or fall ill while doing their job. It helps cover the medical treatment and care of the worker and the lost wages if the worker is temporarily out of the job to recover. If the worker died on the job or from a work-related illness, the worker’s comp policy will help pay for the funeral. 

Commercial Auto Insurance

This insurance policy provides coverage for vehicles leased or owned by a construction company or contractor. In case of accidents involving vehicles you use for your business, commercial auto insurance covers damage to property or physical injury if your vehicle is at fault. 

Besides the liability component, commercial auto insurance also has a property component, which means it safeguards the value of your vehicle against theft, crashes, vandalism, and other perils. The vehicles covered in this policy include cars, vans, light trucks, large trucks, trailers, etc. 

Contractor Equipment or Installation Floater Insurance

Contractor equipment insurance provides coverage for missing, stolen, or damaged equipment or tools used by a construction company. Getting this insurance policy is crucial to protect valuable assets necessary for the completion of construction projects. Without it, it’s hard to recoup financial losses because of stolen or damaged construction equipment or tools. 

Installation floater insurance is almost the same as contractor equipment insurance. The only difference therein is that the former covers construction materials. The installation floater insurance is effective until the installation of the materials is completed or approved by the client. 

Contractor Pollution Insurance

This insurance policy provides coverage for contractors against claims and lawsuits involving environmental pollution associated with construction activities. It covers property damage, physical injury, cleanup, and legal costs related to sudden-onset or gradual environmental incidents. 

A chemical spill, burning, demolition, land clearing, and generating high levels of dust may happen during a construction project. If some lodges a legal complaint against the contractor because of environmental damage caused by construction activity, the contractor will have a monetary backup for any costs associated with the complaint. 

Excess Liability Insurance

This insurance policy provides additional coverage if your existing insurance policies won’t help pay the liability incurred in your construction business. Excess liability insurance is recommended for contractors that work on high-value residential or commercial projects. 

Most general liability insurance has a coverage limit of $1,000,000. If you accidentally damage a property you’re working on that’s worth $1,300,000, your existing insurance won’t cover the extra amount. Hence, getting excess liability insurance is important. 

Contractors Should Provide Timely Notice

Delayed claims may cause insurance companies to hold back insurance coverage. If you’re a contractor, you should give notice to your insurer at the earliest opportunity if you have an insurance claim. 

Moreover, contractors must inspect the coverage options and guidelines when purchasing insurance policies. It’s crucial to read the rules and comply with them to protect your business. 

Takeaway

Contractors should understand the importance of having insurance policies to protect their business. There are several insurance policies that a contractor should get, such as general liability insurance, workers’ comp insurance, commercial auto insurance, contractor equipment insurance, installation floater insurance, contractor pollution insurance, and excess liability insurance.