Building any structure is a process that is prone to hazards. From equipment accidents to unexpected delays, construction companies may need to contend with multiple avenues of revenue loss—potentially damaging their reputation. While home builder insurance cannot stop accidents from happening, it can keep your company financially secure when they do.
Complete insurance protection reduces financial exposure from unexpected incidents and facilitates long-term cost savings. To build the best insurance portfolio, it is helpful to understand which risks a construction company is most likely to face.
Consider the top five construction risks and how home builder insurance can protect you from them.
Risk 1: Property Damage
While the home is typically considered to be the centerpiece of a landscape, a homeowner also owns the lot on which the structure sits. Property damage to any of this owned land is the construction company’s responsibility, as is damage to nearby property.
Sometimes, a construction crew might accidentally dig trenches into the yard with heavy equipment or cut into a valuable tree with their machinery. Alternatively, perhaps they lose their balance carrying lumber and dent a neighbor’s car. All of these scenarios can be covered under home builder insurance, which offers both general liability coverage and more specific property protections where necessary.
Risk 2: Injuries and Worker Safety
Constructing a home poses safety hazards to on-site workers. Workplace accidents in construction are common; in fact, depending on the metrics used for measurement, construction can be considered one of the most dangerous industries, rivaling forestry and logging for workplace injuries and deaths.
Home builder insurance should include liability coverage for workplace injuries and workers’ compensation insurance. The minimum amount of workers’ compensation will vary based on location and the number of crew members, but it should cover injury, illness, rehabilitation, and compensation to the family in the event of a fatal accident.
Risk 3: Equipment Theft or Vandalism
One of the greatest financial investments a construction company makes is in its equipment. When equipment is stolen or vandalized, the company can be on the hook for the cost of replacement without sufficient insurance coverage. Stolen or damaged equipment not only costs money to replace, but it also takes time. This may result in construction delays as new items are in transit to the work site.
Home builder insurance can include equipment coverage for damaged tools needing repair and replacement protection should equipment fail or become unusable due to theft or vandalism. However, construction teams should be prepared to demonstrate that they stored their equipment correctly.
Risk 4: Delays in Project Completion
A construction project may face unexpected delays, whether due to faulty equipment, worker injury, weather events, supply chain issues, or something else. Delays mean falling off the promised timetable, which may leave the company liable for fees associated with failing to abide by their terms.
For instance, if a homeowner was relying on moving into the home on a specified date, the construction company may be responsible for paying for their temporary housing in the event of a delay.
Home builder insurance often includes some measure of business interruption protection to minimize the loss from financial delays. This can cover necessary additional fees during the time as well as help the company address outstanding bills, such as facility rental expenses.
Risk 5: Legal Liability and Contract Disputes
Even the best contractors make mistakes, and homeowners have the right to make a legal claim against a construction company if the work does not comply with the initial contract. Misunderstandings, unavailable materials, or even poor workmanship can form the basis of contract disputes, leaving the contractor entirely liable for fixing the problem.
Of course, this requires additional funds to rework the building. Home builder insurance should include professional liability coverage to address the legal challenges of residential home construction. Be sure to read the details carefully to understand what is and is not included; for instance, a policy may not cover shoddy workmanship unless it can be proven as an accident.
Protect Your Home Building Business With Burton & Company
Home builders are essential to society, and millions of people would not have places to call home without them. However, this industry is also full of risk, and choosing a home builder insurance policy that is personalized for your business’ construction work is an invaluable step in maintaining the longevity of your company. Contact Burton & Company today for a customized insurance solution.
