Construction Insurance 101: Everything You Need to Know

Construction and contract workers are the ones who make a building from an empty plot of land to a sprawling skyscraper. 

Many construction sites can have hundreds of workers on-site, from some of the most diverse occupations — crane operators and civil engineers to superintendents and construction laborers. 

construction insurance 1

With so many on-site workers, the risk of an accident is involved in every project. Every year, nearly 5,000 construction workers are killed on the job in the United States, or about 12 people per day. This includes accidents such as:

With so many factors to look out for, you need a company that has a dedicated construction insurance staff to help you do what you can to minimize your risk exposure.

The right construction insurance will protect your business from the unpredictable hazards of the construction profession. And with our experts on the case, your business will be safe from liability due to equipment damage, job site injuries, or vehicle accidents.

If you have more questions or want to check the price of construction insurance for your business, you can contact us for free

What Is Construction Insurance?

Construction insurance covers financial compensation for mistakes and unforeseen events that lead to damages and losses during construction. This type of insurance is for building contractors, construction companies, or other parties interested in the built property.

What Does Commercial Construction Insurance Cover?

Construction Insurance Coverage Chart

A good construction insurance policy gives you peace of mind, knowing that whatever happens, your business will be safe and be able to rebound from any disaster. 

The specific coverage you get will depend upon several factors:

  • Company size
  • Number of employees
  • Type of work being performed. 

Below are some types of construction company insurance that you may want to consider.

In most states, general liability insurance is required in order to get a contractor’s license. This coverage will protect your business if you are responsible for injury or property damage to others, such as a worker being injured by a fall or one of your tractors going off course and damaging some local property.

Most construction businesses need liability insurance for construction workers to protect themselves against medical damages, attorney fees, injury damages, lawsuits, investigations, and even abuse coverage for liability. General liability insurance usually doesn’t cover employee injuries and auto-related damages. 

Builder’s risk insurance protects your organization’s on-site property from damage during construction or renovation. This includes materials, fixtures, and/or equipment being used. 

A coverage limit on a policy is based on the value of the project when it’s completed. 

Sometimes, you can get additional endorsements to your builder’s risk insurance. These endorsements usually include debris removal, earthquake, flood, equipment breakdown, emergency removal, expediting expenses, and fire department service charges. 

Professional liability insurance will protect you if you give incorrect advice or consultation that leads to damage. This includes suggesting someone use a weaker material when building their house that is structurally unsound, leading to a collapse.

Loss of income insurance will protect your business for up to 12 months if the business is unable to function due to a disaster, such as a wrecked vehicle or if your tools were stolen.

In most states, workers’ compensation must cover employees’ medical diagnosis and treatment from a job-related injury, illness, or death. It will cover wage loss and medical benefits to workers injured during employment. 

Employees who file claims for this type of liability insurance for construction workers could do so if their injury or illness was caused on the job. 

Some of the examples include injuries that happened as a result of a fall or an accident that occurred while operating machinery.

Commercial vehicle construction insurance will cover your cars, trucks, and other vehicles should they damage or cause damage to other vehicles. A typical commercial auto policy includes medical payments, auto liability, comprehensive coverage, and collision coverage.

Umbrella liability insurance will add extra coverage to your insurance plans and increase your business’s coverage. In short, umbrella liability insurance picks up where your general liability insurance stops.

Excess liability insurance provides casualty coverage to protect businesses against catastrophic losses. 

What Does Construction Insurance Not Cover?

Usually, insurance for construction companies doesn’t cover:

  • Negligence
  • Errors and omissions
  • Lawsuits that involve other claims that aren’t bodily injuries, property damages, false advertising, and personal injuries

Types of Construction Bonds

Most jobs require you to have proper bond coverage to even bid for a job. These include:

Performance Bond

The insurance company or a bank issues a performance bond to guarantee satisfactory completion of the project by your business.

Hold Harmless Agreement

A hold harmless agreement is a contract commonly provided by the subcontractor to the contractor or builder to release one or both parties from legal claims. One party often agrees to not to litigate the other party for damages from a transaction between the two parties.

Bid Bond Surety

The bid bond guarantees that if a bidder is successful, the bidder will execute the contract and deliver the needed surety bonds.

How Much Does Construction Business Insurance Cost?

For general liability insurance, small business construction insurance costs about $70 per month or $825 per year. On the other hand, workers’ compensation insurance costs around $275 per month or $3,295 per year. Most states require this policy. 

Different types of construction work cause different degrees of risk to the construction business and the workers on-site. Exposure to this risk is one factor that impacts the construction business’s insurance cost. 

Other factors include:

  • The coverage needs of your construction business
  • Employees
  • Work vehicles and claims history

But the best way to get construction insurance quotes is to speak to one of our insurance specialists and learn everything you want to know about the best construction insurance for your specific business needs! 

Which Insurance is Generally Required on a Construction Project?

Typically, construction projects require at least general liability insurance. Most states require construction companies with at least one employee to have workers’ comp insurance. Furthermore, most states require construction business owners to carry commercial vehicle insurance for business-owned vehicles. 

Why Do We Need Insurance in Construction?

Construction liability insurance offers protection against loss, damage, and liability. This protection is needed at every stage of construction because many risks are associated with construction projects. 

What Insurance Should I Get if My Work Involves Multiple Construction Trades?

If your work involves more than one trade, you can contact an experienced insurance specialist and share an estimate of how much time you spend on each project. This way, you can get a quote for construction insurance designed according to your specific needs. 

Can I Add an Additional Insured to My Construction Business Insurance?

Yes, you can add an additional insured to the building’s general liability insurance policy of your business insurance

Do you still have questions about construction insurance, or do you want to check the price for your business? Contact us today and get all the information you need fast and for free! n