6 Construction Insurance Policies You Should Know About

Construction insurances are one of the most important topics every construction professional needs to understand. There are many alternatives and insurance policies out there and missing one or two can be detrimental to your bidding opportunity.

Construction firms or construction professionals acting as individuals are required to present evidence of their coverage’s as it creates a better image of you and your firm.

The following 6 are the most important construction insurances on the market.

Professional Liability Insurance

Professional liability insurances are now becoming the norm under P3 and BIM collaboration projects. This type of insurance usually covers architects and engineers when working as consultants or provide design services. The coverage is against acts, errors and/or omissions of design and offered services.

The coverage is extremely important after natural disasters or even when the structure faces potential issues with their design and structural integrity. The coverage is needed when there is a breach in the contract between the owner and the provider. It is an affordable and very important construction insurance for just a fraction of the project budget.

CGL Insurance

The CGL or Commercial General Liability provides protection against bodily injury and property damage. This insurance only provides coverage for damages resulting from the defective work, and not to repair the work itself.

The insurance provides coverage for incidents unrelated to professional acts that cause harm or damages to property and/or personal injury. A CGL protects the builder and the owner against unplanned accidents at the construction site that causes bodily or property injury. It is very common to have it as a requirement of construction projects and it might provide coverage in areas that the professional liability won’t cover.

Builder’s Risk

Another important and commonly used insurance is the Builder’s Risk. This insurance protects the site during construction and it is the standard during almost every construction project. The insurance covers the GC, its sub and others covering the structure and material used in the project.

The builder’s risk insurance protects against natural disaster such as fire, hurricane, storms, hail and even theft. Remember when claiming against the insurance, you will need to provide copy of bill of landings, evidence of material delivered to the site and additional paperwork as proof of evidence. Certain exclusions such as employee theft and government rules/actions are not covered under this insurance.

Pollution and Environmental Insurance

Certain contractors such as environmental, geotech and paving contractors carry this type of insurance due to the nature of their work. This policy covers against pollution or remediation costs associated with the work performed by the contractors. Some policies can include third-party claims for bodily injury and/or property damage related to the environmental incident.

Island Marine Insurance

This construction insurance provides coverage when your equipment is being transported between sites. The island marine coverage is valid for tools, materials and equipment when in transit from your office or project to another location.

Workers Compensation Insurance

This is a state or territory mandate insurance providing coverage for lost wages and first aid/medical treatment as a consequence of a work-related incident. It is also useful when a worker wants to return to work and provides additional resources, so the employee can return safely to work.

Common Terms of Construction Insurances

The world of insurances is difficult to understand and sometimes obscure.

As a construction professional, there are certain terms that you should become familiarized to understand the requirements and language provided in the coverage. Some of the most important terms are:

• The Insured – Whoever is receiving the coverage or being protected under the insurance
• Period of insurance – Time on which the policy is valid and providing coverage
• Deductibles – Amount that the insured needs to pay or reimbursed upon an event that required the insurance coverage to pay for benefits
• Policy Limit – Amount paid by the insurer on every claim. It is the maximum amount of money the insurance will pay in case of any situation or event

Construction Insurance Costs

The cost of the coverage varies depending on the type of coverage and policy limits. However, the GCL will range between $400-$800 per year while the island insurance ranges between $600 and $2,000 depending on the type of equipment being moved.

The professional liability insurance can add up to $1,000 per year and will go up as more members are covered under the policy. The workers comp can also be close to $1,000 per year but these insurances protect you in terms of hundreds of thousands and even more in case of a death.

Don’t see them as a cost, rather see these insurance as a benefit to your company in case of any unexpected situation.

Have you acquired any of these insurance policies?