Must-Have Types of Insurance Coverage for Construction Projects
Because prevention is the best line of defense, accurate and streamlined COI tracking is a must-have. Your insurance certificate collection and management should not be another risk.
To help you assure you are accounting for all risks, we are going to explain the most common liabilities in construction. Then we will talk about the insurance policies you need to have to mitigate these risks.
How to Choose the Right Insurance According to Risks
Construction insurance provides protection during construction projects. As a result, the best way to cut risks on construction projects is to be prepared for everything that could go wrong. Additionally, for every risk, it is important to have the right coverage in place.
To begin with your risk analysis, make sure you have the right rules and regulations in place. Remember, prevention does not mean that accidents will not happen. Prevention helps to provide a secure environment for the project to run.
Conducting an exhaustive risk assessment and having the right insurance to face risks has three main advantages:
- Helps assess and ascertain project viability
- Limits professional indemnity claims
- Protects your company’s credibility and reputation
Why You Need Construction Insurance
Often, it is not only necessary to have construction insurance, but a requirement. The law does, in fact, require commercial car insurance. To emphasize, all states have laws that set minimum requirements for auto liability insurance.
Workers’ compensation is also required in most states by law. However, the specific requirements will vary by state.
The law does not require other types of insurance for construction. Though many contracts require contractors to buy insurance for the projects they are working on.
So, let us analyze the different construction insurance you will need.
1. Property Damage
There is a lot of potential for property damage on a construction site. Common examples include accidents that result in damage and faulty work that is not up to the standard stated in the contract. Protecting your business from this risk is important because if a subcontractor causes damage to your project, you may be liable.
To protect against this risk, require subcontractors to carry property insurance and ensure that policies are up to date with your certificate tracking software.
2. Damaged, Lost, or Stolen Tools & Equipment
Tools and equipment insurance is a common type of coverage for contractors. It protects tools and construction equipment on different job sites. If your tools are lost, stolen, broken, or vandalized, this insurance pays for the cost of replacement or repairs.
This coverage is also useful for contractors who rent equipment. If rental equipment has any type of damage, this coverage can help pay for repairs or the rental time you lost.
3. Pollution Liability
No matter the size of your business or the projects you work on, there is a risk that you can get in trouble with environmental pollution. This can be detrimental to any organization. Contractors used to be covered by pollution liability under commercial general liability (CGL) insurance, but this is no longer the case. Today, pollution liability insurance is a standalone policy that contractors must buy.
Pollution liability insurance helps pay for third-party injury, property damage, defense costs, cleanup costs, and other pollution risks.
4. Workers’ Compensation Insurance
Workers’ compensation insurance will protect both projects and contractors in the case of employees injured on the job. This insurance spans beyond the construction industry. It is an important piece of coverage for developers and contractors who plan to employ others who stand the chance of injury on the job.
How to Make Accounting for Construction Risks Easier
Our last recommendation is to automate the management process to collect and track certificates of insurance (COIs). This helps make sure you have the correct coverage, and expiration dates will not be an issue.
At SmartCompliance, we can help with that! Discover how easy it is to request COIs from subcontractors and third parties to assure they have updated insurance protection.
