What Forms of Insurance Do Construction Small Businesses Need?
Owning a construction business comes with a lot of inherent risks. Besides the dangers your employees face daily, there are also the dangers that low-quality work or mistakes can cause. Even the smallest mistakes can be deadly. If you own a construction business, there are several insurance policies you’ll want to ensure you have to protect your business in the case of an accident.
Most U.S. states require workers’ compensation. It covers employees’ medical care, rehabilitation, cash benefits, and supplemental benefits after a work-related injury. Workers’ compensation partially replaces lost wages while recovering from an injury and provides death benefits to workers’ families in the case of a work-related death.
Given the high-risk environments and physical demands of the construction industry, it’s especially crucial to make sure your business has workers’ compensation. Doing so will protect your employees’ health and financial situations. It also dissolves much of your business’s legal burden in the case of a work-related death or injury.
General Liability Insurance
An independent contractor, or 1099 contractor, is self-employed and controls the work they perform. While contractors don’t have to have general liability insurance, clients often won’t work with contractors if your business doesn’t provide coverage for 1099 contractors.
Construction businesses often add 1099 contractors to their general liability insurance policy.
Construction independent contractors are at risk of being injured while lifting heavy materials, using dangerous equipment, and working in a high-risk environment. Adding contractors to your general liability policy protects your business’s finances if a contractor is injured.
Professional Liability Insurance
Professional liability insurance is mandatory for those in the construction field due to the high risk of potential negligence claims. This insurance will cover your business if your workers don’t complete a construction project as planned.
Professional liability will also provide financial protection if you don’t deliver on promised services, are found negligent, or if your work contains errors or other oversights. Adding professional liability to your general liability insurance can save your business money in the long run.
Commercial Auto Insurance
Since construction businesses involve driving company-owned companies, you’ll need commercial auto insurance. Commercial auto insurance will help you pay for any medical bills or vehicle damage in the event of an accident. If any bodily injuries or property damage occur while an employee using a company vehicle, this insurance will pay for expenses related to the accident.
Course of Construction (Builders Risk) Insurance
Often, financial lenders will require you to have Course of Construction insurance, also known as Builders Risk, for the construction project’s duration. Builders Risk takes effect on the day the policy is activated and ends when a project is completed.
During this period, materials, supplies, and other equipment needed for the construction project are insured. It also minimizes the costs of rental incomes, loan interests, taxes, and additional fees associated with a project being delayed.
While equipment insurance isn’t always mandatory, it often is if you’re renting or leasing equipment. This insurance policy will cover equipment that is damaged or goes missing during a construction project. It can also pay for stolen equipment and costs needed to speed a project along if your crews are behind schedule due to stolen or damaged equipment.
Inland Marine Insurance
If your construction crews often ship equipment or supplies, you’ll want inland marine insurance. Many commercial insurance policies will cover most of your tools and equipment, but it may not be sufficient if you ship high-value items that these policies won’t cover. That includes most construction and contracting equipment. This insurance can save your company money if your expensive equipment or tools go missing or are damaged while being shipped or stored near a marine.
Pollution Liability Insurance
For many jobs, you’ll need to prove you have pollution liability insurance. When working in construction, you may work with hazardous materials that could potentially damage property or cause harm to someone. Pollution insurance ensures your business is covered while working on a job and after the job is completed. Having pollution insurance means that your business won’t be held financially liable if hazardous waste cleanup is necessary or if someone is injured because of hazardous pollutants.
Construction Business Insurance Options
If you own a construction business, you’ll need to make sure your business has the insurance it needs before starting a project. Doing so ensures that you won’t be held financially or legally responsible in an accident. Although some optional insurance policies may seem costly in the short-term, they still may save your business more money in the long haul.