Residential construction contractors face numerous risks every time they go to work. From sustaining physical injuries to causing harm to others, losing tools, and failing to abide by local and state regulations properly, the workers responsible for constructing a home are often at risk.
This is why insurance coverage is so essential to the industry. However, not all types of insurance are mandatory, and parsing which coverages are required and which are optional can take more time and effort than contractors have available to give.
Burton & Company helps you understand the nuances of residential construction insurance regulations that contractors and building companies must abide by.
Our team will also offer protection recommendations and how the costs of these coverages can be modified to fit your budget.
Does Residential Construction Require Insurance?
Each state will have different residential construction insurance requirements. Not all states require construction companies or contractors to carry builder’s risk protections, though most will choose to do so anyway.
In general, the most commonly needed residential construction insurance policies are:
General Liability Insurance
Most municipalities will require that all construction crews carry a minimum liability insurance. This coverage protects the contractors against two potential risks: harming someone else and damaging property.
Suppose that, while building a residential project, one contractor took a lunch break and left a nail on the floor, intending to hammer it down later.
If a third party walks into the construction site and steps on the nail, puncturing their foot, the contractors may be liable for any medical bills associated with that person’s recovery.
Similarly, if a contractor is using a nail gun and accidentally shoots a nail through the window of a nearby parked car, they would be responsible for the cost of fixing the window.
General liability insurance covers these and similar instances so that the construction team is not financially liable.
Commercial Auto Insurance
Many states also require commercial auto coverage if the contractors use a company vehicle. This ensures that the company has protection if the company vehicle damages another vehicle or injures a pedestrian.
What qualifies as a company vehicle and whether commercial auto insurance (as opposed to personal auto insurance) is mandatory will depend on the area where the work is being conducted.
Workers’ Compensation Insurance
Most states mandate that contractors carry workers’ compensation insurance as long as they have at least three people on their team (full- or part-time) or at least one person works at least 35 hours per week.
Workers’ compensation insurance pays for medical care related to worksite injuries and can cover the income of a person who is temporarily unable to work.
Suppose a contractor accidentally loses a thumb to a table saw while constructing a residential building. The cost of their doctor visits, any rehabilitative therapy, and the time taken off work to recover will be covered under a workers’ comp policy.
While general liability insurance is typically mandatory, contractors must only acquire the minimum level of protection stipulated by the state.
However, more than this is needed to cover significant issues, and most contractors elect to purchase more than the minimum in coverage. If you need more protection than a basic policy offers, you can buy umbrella insurance to increase your general liability protection coverage.
How Residential Construction Insurance Helps Alleviate Costs
Residential construction insurance mitigates financial risk for businesses by eliminating substantial costs they would otherwise pay out of pocket.
For instance, if an individual is injured on a construction site and chooses to pursue legal action, the company could be on the hook for medical costs to treat the injury and legal fees to navigate the suit in court.
Residential construction insurance removes these costs so construction professionals can focus on their work. The quality of a residential construction insurance policy matters.
Working with a local insurance group can help solve the issues unique to your business at the most competitive rates. They provide more personalized, custom service that nationwide chains cannot be based on their knowledge of your local environment and unique needs.
A reputable insurance agency can help you maximize the amount of coverage you secure within your budget while keeping you in alignment with state requirements and recommendations, and a nearby insurance group is uniquely poised to do so, thanks to their local knowledge.
Get Comprehensive Insurance Coverage from Industry Experts
Whether you are a single contractor working in residential construction or an entire building company, you should be sure that your insurance protections align with local and state minimums.
The experts at Burton & Company can help you explore your options for comprehensive coverage for your residential construction projects and build a plan that addresses your most pressing risks: personal injury, auto damage, equipment breakdown, and more.