Construction Insurance

Commercial construction projects involve inherent risks, from property damage and accidents to unforeseen delays and liability claims. Commercial construction insurance plays a crucial role in mitigating these risks and protecting various stakeholders involved in the project. Here's a breakdown of its key aspects:

Base Coverages

The specific coverages included will vary significantly depending on the type of business, its size, location, industry, and specific risks. However, there are some general categories of coverage that are frequently found in many business insurance policies:

General Liability:

• General Liability: This comprehensive coverage forms the cornerstone, protecting against claims of bodily injury, property damage and personal injury to others arising from your business operations, products, or premises. Even if a lawsuit against your business is ultimately found to be invalid, General Liability covers your legal defense costs and includes attorney fees, court costs, and other associated expenses. The most common coverages include: Show More....
  • Bodily injury: Covers medical expenses, lost wages, and other costs associated with bodily injuries sustained by others due to your business activities, on your premises, or by your products.
  • Property damage: If your business activities (including employees, vehicles, or products) damage someone else's property, this covers repair or replacement costs.
  • Personal & Advertising Injury: Covers legal defense costs and damages awarded to others due to non-physical injuries stemming from your business activities, including libel and slander, copyright infringement and wrongful eviction.
  • Products and Completed Operations: Protects against claims alleging injuries or property damage caused by defective products your business manufactures, distributes, or sells. It is essential for businesses that manufacture, distribute, or service products.
  • Hired and Non-Owned Auto: Typically covers liability only coverage arising from rented, leased, or employee-owned vehicles used for business purposes.

Commercial Property:

• Commercial Property Insurance: Covers the repair or replacement costs of your main building, rented offices and any owned structures like garages or storage sheds as well as the furniture, equipment, inventory, and other business belongings inside your building. This can also include tools and equipment crucial for your work.
• Business Interruption: This can help cover lost income and operating expenses if your business is forced to close or operate at a reduced capacity due to a covered event like a fire, natural disaster, or power outage.

Common Additional Coverages:

• Commercial Auto Insurance: Covers your business vehicles for collisions, comprehensive damage, liability, and medical payments.
• Builder's Risk Insurance: Covers the physical structure and materials on-site from perils like fire, theft, weather events, and vandalism during the construction phase.
• Contractual Liability: Covers your business if you accidentally breach a contract and cause harm to another party. Typically used by businesses that enter into or provide services through a written contract.
• Construction Bonds: These include Bid Bonds, Performance Bonds, Payment Bonds and Warranty Bonds. Over 7000 bonds available in all 50 states.
• Inland Marine Insurance: While some standard insurance covers property at a fixed location, Inland Marine covers property while in transit, such as goods being shipped or transported. This is sometime referred to as Business Equipment Protection.
• Workers Compensation Insurance: A mandatory insurance program in most states that protects both employees and employer by providing medical care and wage replacement benefits to employees who are injured on the job. The most common additional coverages included are: Show More....
  • Employers Liability: This coverage protects your business if an employee sues you for a work-related injury or illness, alleging that your negligence contributed to their condition. It covers medical expenses, lost wages, and legal defense costs associated with such lawsuits.
• Equipment Breakdown: Covers repair or replacement costs for essential business equipment damaged due to mechanical breakdown, wear and tear, or power surges.

Optional Coverages to Consider:

While a commercial construction insurance policy typically offers broad coverage, the specific extent of how a general contractor is covered can vary depending on several factors, but a couple of options include:

• Professional Liability Insurance (E&O): Protects against financial losses if you or an employee makes a mistake in their work or offers incorrect advice.
• Employment Practices Liability: Protects against lawsuits alleging discrimination, wrongful termination, or other employment-related issues.
• Pollution Liability: Provides coverage for losses or damages resulting from unexpected releases of pollutants, typically excluded in general liability and property insurance policies.
• Excess Liability Insurance: Provides an additional layer of liability protection by kicking in when primary liability insurance limits are exhausted. This is similar to an Umbrella except that it provides additional coverage specifically for a single underlying insurance policy, typically general liability.
• Umbrella Insurance: Provides additional liability coverage beyond the limits of your primary policies. This is similar to Excess Liability except that this provides broader coverage beyond standard business insurance policies, potentially encompassing liability, property damage, and even certain employment-related claims.

Benefits of having it:

• Risk mitigation: Provides financial protection against unexpected events, minimizing project losses and ensuring business continuity.
• Enhanced client confidence: Demonstrates professionalism and protects clients from financial burdens if accidents occur.
• Contractual requirement: Many contracts mandate contractors to carry specific insurance coverage.
• Peace of mind: Allows all parties involved in the project to focus on successful completion knowing they are financially protected.

Key points to remember:

• Coverage details and requirements vary depending on project size, complexity, location, and regulations.
• Multiple parties, including contractors, subcontractors, and property owners, may require separate insurance policies.
• The general contractor's policy may only provide limited coverage for subcontractors. It's crucial to ensure subcontractors have their own liability insurance and verify adequate coverage through certificates of insurance (COIs).
• Consulting with an insurance professional is crucial to ensure you have the right coverage at the right level for your specific project.