Business insurance to protect your company
Business insurance is critical to any construction contractor. There are many types of coverage. Some are required by law and others are optional. The type of coverage and the coverage limits you need depend on the size of the projects you do, the types of labor you perform, how much work you subcontract to others and other related criteria. Consult with two or three insurance agents. They will “shop” your particular needs around to multiple insurance carriers to get you the best rate and coverage for your company.
The basic types of business insurance required of contractors
- Worker’s Compensation insurance, which provides compensation for lost wages and medical care for employees who are injured in the course of employment, in exchange for mandatory relinquishment of the employee’s right to sue his or her employer for negligence. Coverage A: Worker’s compensation is typically statutory depending on the state where the policy is written. Coverage B: Employers Liability Insurance limit is based on the requirements of the contract. Worker’s Compensation is the most costly insurance coverage. Premiums are based on the type of labor you use, as well as your firm’s record of claims. For example, an iron worker will cost more to insure than a painter due to the risk level of the two trades.
- General Liability insurance. General liability insurance protects your contractor or construction company against bodily injury and property damage lawsuits for negligence.
- Automobile Liability insurance provides liability coverage for autos owned or leased by the company. This policy also protects the company against auto liability claims made against the company because of incidents that occur when employees are driving their own autos while on company business.
- Excess or Umbrella Liability insurance is liability coverage over and above the primary liability coverage provided by the underlying general liability, workers compensation and automobile liability policies. The term “umbrella” is used because it covers liability claims that exceed the other policies.
- Equipment Floater insurance covers loss or damages to company-owned, leased or rented tools or equipment.
- Commercial Property insurance protects against loss or damage to your home office, as well as off-premises property (i.e. a remote storage location). This coverage can also apply to personal effects and employee property.
- Commercial Crime insurance protects your company from exposure due to criminal behavior of your employees, including theft, fraud, forgery or destruction of property.
- Builders Risk insurance covers damages and losses to completed portions of a specific project, as well as materials or equipment that are destined to become part of the project but are net yet installed. It is typically provided by the project owner not the contractor.
- Installation Floater coverage is similar to Builders Risk, but it is purchased by the contractor. This coverage protects the contractor for the same types of losses as a Builder Risk policy, but usually comes into play only if no Builders Risk coverage has been purchased by the owner.
While these coverages are common for most contractors, some projects will require specific coverage limits, as well as other related language and endorsements that your insurance carrier must provide. Always send these requirements to your insurance agent before you bid a project to ensure you can meet the terms of the contract. For more information about insurance you can contact: American Subcontractors Association – California, HACIA (Hispanic American Construction Industry Association) or your local Hispanic construction association.[tip id=”9086″]