When you work on projects worth thousands (or hundreds of thousands) of dollars, you have to carry insurance to protect yourself as well as your clients. Construction insurance comes in many different forms, some of which are project-specific.
1. General Liability Coverage
Liability insurance covers damage to a client’s home or property.
What happens if one of your employees accidentally plants a sledgehammer in a finished wall or demolishes part of a house with a crane? If you have general liability coverage (GL insurance), your insurance policy will handle the damages so you don’t have to pay out of pocket.
General liability isn’t just a convenient way to protect yourself. In most states, you’re required to carry it before you accept a job as a contractor. You can purchase it separately or as part of a business owner policy (BOP), depending on your insurance carrier.
2. Worker’s Compensation Insurance
Construction can prove dangerous, especially when your workers are handling power tools and heavy equipment. If an employee gets injured on the job, you’re responsible for providing worker’s compensation coverage. This type of insurance pays for medical bills, lost wages, and other expenses related to an on-the-job injury.
Different states impose varying laws regarding worker’s compensation. Generally speaking, you need it if you have more than five workers, but knowing your state’s guidelines will prevent you from making a costly mistake. Additionally, even if you’re not required to carry worker’s comp, you’ll still have to cover employees’ expenses if they’re hurt on the job.
3. Commercial Automotive Insurance
Contractors often drive large trucks and use other forms of heavy equipment. You’ll need a dedicated commercial auto insurance policy to cover those vehicles, whether you drive them or put an employee behind the wheel.
In many cases, you can get a discount on your premium if you buy different types of commercial insurance from the same provider. However, make sure to keep personal and professional policies separate to limit your personal liability.
4. Surety Bonds
Most states require contractors to purchase a surety bond.
A surety bond isn’t an insurance policy, exactly, but it provides similar protections. Instead of protecting clients from damage and other on-site mishaps, however, it protects them in case you’re unable to complete the job.
It can also provide protections for subcontractors, vendors, suppliers, and other businesses with which you work. If you’re unable to pay for materials, for instance, the surety bond can make up the difference.
5. Asset Protection
You can also buy insurance to protect your construction company’s assets. For instance, if you have special equipment like generators, it insures against having to replace it on your own in the event of damage. You can also insure technological equipment, such as computers and servers, that you might use during the course of business.
If you want to supply your employees with health insurance, life insurance, and other types of coverage, you can do that, as well. It all depends on how you run your business and what you want to cover for your workers and your assets.
The construction industry requires you to protect yourself from unforeseen damages. The above insurance policies can make your business safer and help you comply with the law. You’ll also need to stay on top of your continuing education requirements, so browse courses by state now.