Home builders face numerous risks during construction, from equipment damage to worker injury. However, the greatest threat is the many forms of liability for which a construction team can be found responsible.
Managing liability risks in home building is essential, and navigating the complexities of home builders insurance with confidence is a skill that will pay dividends for any construction crew.
Here is what every contractor needs to know about liability in the industry.
The Foundations of Liability Risk in Home Building
Liability is a legal term describing a party’s responsibility for a situation or action. Liability claims make up a large portion of the number of insurance claims filed by construction companies each year.
In home building, crews may be liable in various sectors: auto, work safety, property damage, and more. Home builders insurance safeguards against the financial repercussions of being found liable for an accident, injury, or damage.
Identifying Common Risks and Their Impacts
Each construction project is unique, but most face the same liability risks. These include:
Property Damage
Construction requires machinery and tools to be brought to the site. If these tools or the workers using them cause damage to someone else’s property, such as if a wooden framing plank falls onto a nearby parked car, the construction business is liable for repairing the damage.
Third-party injury
If a third party is harmed during construction, such as by tripping on debris near the job site, the construction team must pay for their medical bills.
Construction Defects
Each building must be constructed according to approved architectural plans and code regulations. If the builders make a mistake or do not build an element properly, they are responsible for fixing the issue at their own expense if they do not have insurance to cover the cost.
Vehicle Accidents
Construction companies that use commercial vehicles are liable if their vehicle causes property damage or bodily harm. Depending on how the crew operates and what projects it accepts, many more potential areas of liability exist.
Liability cases affect a firm’s finances and reputation, so working with an insurer to quickly and fairly compensate involved parties can go a long way toward preserving a company’s reputation.
Navigating Insurance Policies: What Contractors Need to Know
When selecting an appropriate home builders insurance policy, construction teams must evaluate coverage types, exclusions, and how to ensure adequate protection.
It is wise to begin with baseline policies that cover the most common risks before moving into specialized insurance and riders that address job- or team-specific challenges.
General Liability Insurance
Non-negotiable for most projects, general liability insurance is needed to protect construction teams and to land contracts. Many municipalities will not grant permits if a crew cannot prove they are covered under general liability.
This type of insurance protection covers harm to third-party possessions and people up to a maximum amount.
Umbrella Insurance
A business can purchase umbrella insurance for large or challenging projects. This can expand both the inclusions and the policy maximum of a general liability policy.
Errors & Omissions
This type of insurance secures contractors against building mistakes and oversights, such as installing electrical components that are not up to code.
These mistakes will still need to be fixed, but the insurance policy can cover the cost of remediation.
Home Builders Insurance
The lynchpin in most residential construction strategies, home builders insurance (also called builders risk insurance) addresses liability and risk at the work site.
This could include the cost of potential delays related to unexpected construction challenges and damage to the project itself, such as fires or storms.
Customizing Insurance to Your Building Project’s Needs
Each construction project is unique, so working with industry experts is essential. Many insurance policies are highly customizable to suit a construction team’s size, project scope, and unique risks.
Consider preparing in advance for insurance coverage by hiring individuals with experience and investing in industry and safety training, which can lower premiums by decreasing risk.
Protect Your Home Building Projects with Burton & Company
Home builder’s insurance manages liability risks, especially when paired with other types of insurance for complementary protection.
The professionals at Burton & Company work with construction teams to craft personalized blends of insurance protection that ensure comprehensive coverage from start to finish, no matter the project’s scope.
Reach out to Burton & Company for expert advice and tailored insurance solutions that secure your construction projects against liability and potential financial fallout.
