A Guide to Insurance for Construction Contractors

April 3, 2023

Construction contractors face many risks every day like property damage, bodily injury, and even death. This is why it’s important to have the correct insurance in place in case an incident occurs. The most common insurance policies that construction contractors need to have include general liability insurance, workers’ compensation insurance, and property insurance.

Which Insurance Policies to Consider?

With general liability insurance, you protect your company from claims of bodily injury or property damage caused by negligence. While workers’ compensation insurance will protect your workers against bodily injury or death and loss wages caused by accidents on the job. Lastly, property insurance protects construction contractors from claims of damage to their property, including buildings, equipment, and supplies.

It’s important to note that machinery and equipment that is transported from job to job are not covered under standard property insurance policies. These items are covered under contracts called “floaters.” Additionally, a builder’s risk insurance policy will help cover the ever-increasing value of a building or home you are working on. This is typically purchased by the owner of the building, but it’s important to evaluate it on a per-job basis.

These insurance policies may be the most important ones to consider, but they may not include everything you need coverage for. A couple of additional policies to consider are professional liability insurance and surety bonds. Professional liability insurance protects against claims of professional negligence, such as an error in design or construction. Bonds protects contractors and owners from “non-performance” claims, such as failing to complete a contract.

The amount of insurance coverage you need as a construction contractor will vary, but factors you should consider are:

  • Size of business (revenue)
  • Type of business
  • Number of employees
  • Level of risk An independent insurance agent, such as Lewis Mohr, can help you determine the right amount of coverage based on these factors.

Benefits of Coverage

Insurance is a significant expense for many companies, including construction contractors, but it is necessary. Here are some benefits of having insurance as a construction contractor:

  • Financial: The cost you pay for an insurance premium is much less than you’d have to pay to cover the costs of damages, injuries, or a lawsuit.
  • Peace of mind: When you have the correct policies in place, you can focus on running your business, not worrying about financial ruin in the event of an accident.
  • Protection from legal liability: Insurance can help protect you and your business from legal liability if someone is injured or property is damaged on the worksite.

If you are a construction contractor, it is important to have the right insurance policies in place. When you work with an independent insurance agent, you can determine the right amount of coverage for your unique needs. Contact us today for a detailed business analysis and insurance quote!

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