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Insurance Requirements for Contractors and Construction Companies

As a contractor or construction company, it’s important to understand the insurance requirements necessary to protect your business from potential liabilities. Here are some of the insurance policies that contractors and construction companies typically need:

General Liability Insurance: This policy covers damages and injuries to third parties, including clients, customers, vendors, and the general public. It can help pay for legal fees, medical expenses, and damages resulting from accidents or injuries that occur on a job site. This is the most critical policy for contractors, and the one with the most coverage variables.

Workers’ Compensation Insurance: This policy is required in most states and provides benefits to employees who are injured or become ill on the job. It covers medical expenses, lost wages, and rehabilitation costs. This is often the most costly policy a sub-contractor carries, thus cost control measures are imperative.

Commercial Auto Insurance: If you have vehicles that are used for business purposes, you’ll need commercial auto insurance to cover accidents and damages. Effective fleet safety strategies are critical to keep the cost of this coverage in check.

Professional Liability Insurance: Also known as errors and omissions insurance, this policy covers claims of negligence or professional errors that result in financial loss for clients. This type of insurance is particularly important for architects, engineers, and other construction management professionals. Any contractor performing design build work also needs this coverage.

Builder’s Risk Insurance: This policy covers damage to a building while it’s under construction. It typically includes coverage for theft, vandalism, and natural disasters.

Umbrella Insurance: This policy provides additional liability coverage beyond the limits of your other policies. It is best practice to have umbrella insurance if you have significant assets or operate in high-risk industries. This coverage is often mandated by project owners or general contractors.

Inland Marine coverage can cover a wide array of exposures contractors have. These include damage or theft of equipment and tools, loss of building materials prior to installation, and coverage on leased or rented equipment.

It’s important to work with an insurance broker who specializes in contractor and construction company insurance to make sure you have the right coverage for your business. Your broker can help you assess your risks and find policies that fit your budget and needs.

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