“Construction insurance” is a broad term used to describe types of Contractor liability insurance policies that can be purchased to protect contracting operations.
It’s easy to find news stories about accidents on a job site, as Contractors liability exposure can be sky high. Liability for work done doesn’t just stop when the Contractor says the job is done either. Trouble could come years after the work is completed. An improperly welded pipe connection could let loose and cause water damage a year later. Faulty wiring could easily cause a building to burn even 5 years after electrical work has been done. A child playing in a construction area can injure themselves or others playing with raw materials. Examples like these have no end.
Because of the kinds of risks that could be faced by a Contractor, Contractor insurance is used as protection for the business operations of the Contractor from unforeseen and certainly unwanted lawsuits and litigation proceedings stemming from Property Damage or Bodily Injury incidents.
It starts with a Contractor Bond which can be obtained fairly easily, though the cost of a Contractors bond is based on the applicant’s credit. The bond becomes “assurance” or “surety” that the Contractor is going to fulfill the job to a satisfactory degree. In addition, a bond may be called upon to pay for things like an unpaid supplier or subcontractor, or in the case of stolen or missing materials from the job site or damage to the construction site.
If a Contractor is lucky enough to grow the business to the point where subcontractors are needed, General Contractor insurance could carry higher Contractor Liability Insurance limits of $1 million, $2 million or more. An expanding operation may even benefit from a wrap insurance policy, a type of General Contractors insurance used to cover entire large scale projects like shopping malls, condos or apartment houses.
Insurance for Contractors doesn’t have to be complicated, but unfortunately most people perceive it that way. Therefore, make a list of questions to ask your Broker to help make sure the Contractor’s insurance you’re purchasing fits your needs now, and reasonably into the future of your business. Even though endorsements, otherwise known as policy changes may be able to modify some coverages while the policy is in effect, there’s no substitute for buying protection that can grow with you from the very beginning.
You and your Broker both share responsibility for acquiring the right Contractor insurance liability, so make sure you choose a Broker who knows what they’re doing and can explain features and benefits of the Contractors insurance policy to your satisfaction. Insurance is very competitive, so a Broker who’s connected with several insurance carriers and gives you the best of what they’ve got may prove to be a very valuable asset to you.
Knowing that you’ve obtained the right Contractor liability can take you far, giving you peace of mind to operate your business now and for a very long time.