The importance of insurance in the construction industry

There is never an identical job or day in the life of a construction worker. There will always be different conditions, problems, contractors, workers, blueprints, construction materials and construction equipment involved. As with most industries and businesses, insurance is necessary for a variety of reasons. You need to protect yourself in the construction industry where anything could go wrong unexpectedly at any time.

Why it’s important

Construction is a dangerous and usually unpredictable industry to work in. There are only so many elements of a construction site that you can control and the rest relies on the weather and operational machinery.

Construction insurance is required if you work on any construction project or are a construction company. You need to make sure you have the necessary insurance policies covering your business in the unfortunate event something happens to someone onsite, to the building or structure you build, or to any of your construction equipment. It’s an expensive business, so it’s worth the time and money to insure every aspect of it.

Types of construction insurance

• Contractor liability insurance: This is one of the more important insurance policies to have for your construction company. Contractor liability insurance protects you against worker or other injuries, accidents and property damage caused while on the job. This protects your company assets and employees and will cover all court-related fees in the event a case is opened against you. It would be safest to make sure your insurance coverage is up to two or three times the value of the construction project. There is also professional liability insurance that covers contractors who assume more liability responsibility than is covered in the general contractor liability policy.
• Worker’s compensation insurance: Your people are an important part of your business and they are the ones risking their limbs and lives every day they walk onto a building site. Should there be a problem with a piece of equipment or there be an incident where a worker is injured, worker’s compensation insurance kicks in to cover any medical bills and loss of wages as a result thereof.
• Builder’s risk insurance: This is a temporary policy that needs to be taken out for the duration of your construction project. Builder’s risk insurance protects the property structure, any materials you will be using throughout the project and limited accidents coverage. Most builder’s risk policies will cover damage in the event of theft, fire, hail, lighting and explosions (among a few others). It won’t, however, cover earthquakes, water damage, employee theft or contract penalties, for example.
• Performance bond: This type of policy will protect the contractor or builder from any losses, should they not be able to perform the construction task as agreed upon in the contract. The money from this policy will cover the completion of the construction task. This policy is for the peace of mind of project owners by ensuring their project will be completed even if the initial contractor fails to do so, and at no additional expense. A performance bond is also known as a surety bond.
• Contractors pollution policy: There are many aspects of construction that lead to harmful chemicals and pollutants being left to spoil the air or contaminate nearby water sources. And, unfortunately, there are more construction companies who stick to their environmentally damaging practices because it’s cost-effective and easier than companies that are environmentally conscious of their impact. A contractors pollution policy is there to protect construction companies from any pollution damages as a result of their construction work.
• Commercial automotive insurance: Think about your brand new Volvo construction equipment. Or your Terex construction equipment that you use for your large construction projects. Think about how much you had to save in order to buy those heavy-duty machinery items and how much it would cost you to have to replace them. You need to insure your construction equipment to cover yourself in the event of any damage as a result of working on a construction project. You also need to be insured in the event your construction equipment is the cause of an accident on site. With commercial automotive insurance, you can do just that.

When it comes to construction, you don’t want to take any chances because the chances are something is bound to happen anyway. You want to be prepared and covered for when it happens and keep your people, company and assets safe. This is why insurance in the construction industry is so important and also why it’s illegal to not have insurance policies in place when doing any construction work. These are only the main types of construction insurance policies out there. Do your research and ensure your company is covered for absolutely everything.