Construction Insurance is a type of property and liability insurance policy that is designed to protect businesses in the construction industry from financial losses resulting from accidents, damage to property, and other liabilities. It includes coverage for property damage and bodily injury that may occur during a construction project, as well as liability protection for any damages or injuries caused by the contractor’s negligence.
This type of insurance can be used for projects of any size, from small residential renovations to large-scale commercial developments. It is important for construction businesses to understand their liability exposure and the types of insurance policies available to protect against potential losses.
Who Needs Construction Insurance?
Construction Insurance is necessary for any business involved in the construction industry. It is imperative for contractors, subcontractors, and construction companies to have adequate coverage in order to protect themselves from financial losses as a result of accidents, damage to property, and other liabilities.
The types of businesses that require Construction Insurance include general contractors, subcontractors, and construction companies.
In addition, Construction Insurance is often required by local, state, and federal governments in order to protect the general public from potential liabilities.
Types of Construction Insurance
There are several types of Construction Insurance available to businesses in the construction industry. These include:
- General Liability Insurance: Provides coverage for bodily injury, property damage, and legal costs resulting from the contractor’s negligence.
- Builder’s Risk Insurance: Offers coverage for property damage and other losses resulting from accidents or defects in the construction project.
- Professional Liability Insurance: This type of insurance provides protection from errors and omissions resulting from the contractor’s professional services.
- Workers’ Compensation Insurance: Provides coverage for medical expenses and lost wages if an employee is injured on the job.
- Equipment Insurance: Offers coverage for tools, machinery, and other equipment that is used in a construction project.
- Surety Bonds: This type of insurance provides protection for contractors and subcontractors in the event of a default on a contract.
How Much Does Construction Insurance Cost?
Generally, the cost of such a policy will be based on the estimated value of the construction project, the type of coverage selected, and the risks associated with the project.
Moreover, Construction Insurance may also be subject to deductibles, which are the amount of money that the insured must pay out-of-pocket for a claim. The higher the deductible, the lower the cost of the insurance policy.
Requirements for Construction Insurance
In order to obtain Construction Insurance, businesses must provide certain information to the insurance company. This information includes:
- Business information and contact details
- Type of business
- Type of project
- Estimated value of the project
- Location of the project
- Risks associated with the project
- List of subcontractors and employees
- Safety protocols in place
The insurance company will then assess the information and determine the best type of coverage for the project.
Commercial Insurance And Business Industry Classification
- SIC CODE: 1521 General Contractors – Single Family Homes, 1522 General Contractors-Residential Buildings, Other Than Single-Family, 1541 General Contractors-Industrial Buildings and Warehouses, 1542: General Contractors-Nonresidential Buildings, Other than Industrial Buildings and Warehouses
- NAICS CODE: 236117 New Housing For-Sale Builders, 236116 New Multifamily Housing Construction (except For-Sale Builders), 236115 New Single-Family Housing Construction (except For-Sale Builders), 236118 Residential Remodelers, 236220 Commercial and Institutional Building Construction, 236210 Industrial Building Construction
- Suggested Workers Compensation Code(s): 5606 Contractor – Project Manager, Construction Executive, Construction Manager or Construction Superintendent, 5403 Carpentry – NOC
Construction Insurance – The Bottom Line
Construction Insurance is an important cover for businesses involved in the construction industry. It is designed to protect construction companies, contractors, and subcontractors from financial losses resulting from accidents, damage to property, and other liabilities.
It is important to understand the different types of Construction Insurance available, as well as the cost and requirements associated with obtaining coverage. With this type of safety net in place, you can rest assured that your project is sufficiently protected.