Commercial construction contracts are typically larger than residential architecture ones, reaching hundreds of thousands or even millions of dollars. Investing in comprehensive insurance coverage is non-negotiable when the stakes are this high. While each project may require protections unique to the risks of that job, some overarching coverages will apply no matter the contract.
Here is a complete guide to commercial construction insurance coverages, including the most common types of protection and what they do (or do not) include.
Equipment Insurance
The equipment necessary to complete commercial construction often requires a sizable investment, and should this machinery stop functioning, the entire project timeline could be threatened. For equipment valued at $10,000 or more (depending on the policy), equipment insurance can help cover the expenses related to repairing or replacing the machinery needed to get the job done.
Tools Insurance
A builder’s equipment includes large machines such as cranes and excavators. Tools of a lower value, including saws, drills, and similar items, still need to be protected to ensure the construction can proceed as planned.
Tools insurance most commonly covers tools that are less than five years old and valued under $10,000. While it will not protect against damage caused by improper use or regular wear and tear, sudden and unexpected tool failure can lead to expensive replacement costs without insurance protection.
Builders Risk Insurance
If a disaster should befall a construction site, the construction team may be liable for some of the rebuilding costs so that the project can still finish on time. Builder’s risk insurance covers structures against damage from hail, vandalism, and fire.
However, the builder’s risk insurance only addresses liabilities at the construction site. Should problems arise off-site, another type of coverage will be required.
Commercial Auto Insurance
Commercial construction companies rely on business vehicles to transport crew and equipment to and from the site. Personal auto insurance is insufficient to cover vehicles used for this purpose, so that commercial auto insurance will be required.
Should a vehicle become damaged in an accident, be stolen, or suffer numerous other fates, a commercial auto insurance policy can keep the construction team on the road and pay for repairs or a new vehicle where necessary.
Errors & Omissions Insurance
Even the best construction teams are only human, which means they may make mistakes during their work. From failing to abide by unique local regulations and codes to incorrectly interpreting an architect’s layout during construction, the client may not be satisfied with the work due to errors.
The cost to the construction team to amend these issues to the client’s satisfaction can be covered by errors & omissions (E&O) insurance. In many scenarios, this protection can also shield against liability for copyright infringement and negligence.
General Liability Insurance
Every business should utilize a general liability insurance policy, and most permitting and contract processes will not permit a construction company to take on projects without general liability.
This type of insurance protects others against the actions of the construction team. From accidentally causing injury to others to damaging another person’s property, a crew may find themselves responsible for financial damages out of their pockets without proper general liability insurance coverage.
Workers’ Compensation Insurance
Construction is dangerous, and workers may be injured during project completion. Should they require medical treatment, physical or mental rehabilitation, or time off work to rest and recover, the company would typically be responsible for paying these costs. Workers’ compensation insurance provides financial coverage, ensuring workers have the necessary healthcare support.
Umbrella Insurance
Many projects fit within a construction company’s insurance coverage, especially if they work alongside industry professionals to craft policies that suit their needs.
However, companies that regularly take expensive contracts or face significant risks may find that basic general liability coverage may not fully protect them from the financial risks they face. Umbrella insurance can be added to expand the protections offered by other types of insurance, such as general liability protection.
Get Comprehensive Commercial Construction Coverage from Industry Professionals
Whether you are new to the construction space or seeking to reevaluate your insurance options, collaborate with an insurance agency with commercial construction experience.
The experts at Burton & Company can help your construction business achieve a customized blend of insurance coverages that address your most pressing needs. Contact Burton & Company to schedule an appointment.
