Best Insurance for Heavy Construction

What does a construction insurance policy cover? 

Course of construction insurance coverage, also known as builders risk insurance, protects your insurable interest in fixtures, materials, or equipment before or after installation, in the event those items sustain damage or physical loss. For residential or commercial builders risk policies, there are many groups of eligible clients, including contractors, builders, homeowners/property owners, school districts, house flippers, retail companies, and investment/development companies.  

Construction insurance policies and the project that they cover are usually available for remodelling, ground-up new construction, and installation. Those types of projects classify as either commercial or residential risk. Keep in mind, thought, that the definition of those categories changes depending on the provider. Commercial projects are typically much more varied than residential projects, covering anything from wind turbines to office buildings to multimillion-dollar sports arenas.  

Construction insurance is designed to protect sites from damage and loss. While coverage and limitations vary depending on the provider, builders risk policies may cover vandalism and theft, plus coverages for flood, soft costs, earthquake, windstorm, ordinance and law, and business income or extra expense. Policies can also cover damage to temporary structures, construction material, scaffolding, fencing, landscaping, and subdivision signs.  

How much is liability insurance for a contractor? 

The costs of general contractor insurance depend on your business risks, your policy limits, and the value of your equipment, among other factors. The following cost estimate is taken from policies bought by Insureon customers in the U.S. For general liability insurance costs for general contractors, the median premium is roughly $90/month, or $1,090/year. This type of policy protects against third-party injuries, third-party property damage, and advertising injuries. For professional liability insurance costs for general contractors, the median is under $45/month, or $520/year. Also referred to as errors and omissions insurance, this policy covers general contractors against client lawsuits claiming negligent, late, unsatisfactory, or incomplete work.  

 What is construction defect insurance? 

The financial and reputational losses can be significant when defects occur in construction. Stemming on issues either in the design or construction, construction defects cover a wide range of issues, many of which involve structural problems, water intrusion, or electrical issues. Sometimes, the defects could result in unstable and dangerous conditions. There could also be serious financial implications for the property owners and the contractors involved, even in less severe cases.  

Property owners could sue contractors if and when defects are discovered. With the hopes that insurance will cover the costs of the lawsuit, the contractor might file a liability claim. It is important to know that many commercial general liability policies don’t provide coverage for defects in construction. Both the laws of the jurisdiction and the language of the policy are crucial in interpreting coverage.  

Proactive customer communication, as always, is crucial to prevent any issues from arising. Ensuring subcontractors have the proper certificates of insurance are in place and are well-vetted is important.  

Who should pay for builders risk insurance? 

Builders risk insurance will protect you against risks that some other contractor insurance policies might not cover. It helps protect your equipment and tools on the job site and helps to cover damage to finished parts of the project while the work is ongoing. A comprehensive insurance policy, builders risk all the parties involved in a building project, including subcontractors, property owner/developer, banks funding construction, and the general contractor. Each of the parties may face a financial loss if an accident occurs during the course of the construction project.  

Just one of the project’s participants is responsible for securing the builders risk policy, generally the developer or owner or the general contractor. Both of those parties typically make the biggest investment in any given project, have the most to lose, and are likeliest to benefit the most from this type of insurance. The owner of the project and the general contractor would agree on who is responsible for buying the policy while working out the details of the given project, ensuring all of the parties are listed as insured on the coverage.  

Do contractors carry builders risk insurance? 

It makes sense for contractors to carry builders risk insurance, with contractors controlling other aspects of the process. This type of policy confers certain rights to the first named insured, including paying premiums, receiving certain communications, and, sometimes, serving as sole agent for the other insured parties. In other circumstances where losses occur, owners become concerned about filing claims when they’re most needed. If contractors are in control of a policy, coverage can be used in these instances before they become an issue for the owner.  

Do you need builders risk insurance for renovations?  

Because it provides individualized protection for the related materials and structure leading up to your home renovation project, builders risk insurance is a pivotal aspect of your renovation, installation, and construction project. It is formulated specifically for buildings under construction – including renovations.  

Builders risk insurance, also called “course of construction” insurance, covers the property and homeowner from financial loss in the event of losses or damages of the project’s materials and structure during construction. Builders risk policies are available for residential and commercial projects.