Builders Risk & Wrap-Up Insurance for construction risks
The construction industry is a big contributor to the Canadian local and national economy. With big industry and opportunity comes big risk and pressure, both on the owner and management. Both general and sub-trade contractors face a wide variety of exposure, and this requires an insurance program that protects the company and owners against the multitude of possible concerns.
We all know accidents or unforeseen events happen and can result in significant losses and liabilities. How do you know if you have the right kind and amount of insurance coverage?
Required contractor and construction insurance
Commercial general liability (CGL) insurance is a requirement for a contractor, and it’s crucial that the construction insurance policy provides appropriate coverage. Most of your clients will require proof of insurance.
The only way to effectively protect your business assets is to carry adequate commercial general liability insurance. In today’s world, most construction contracts require a business to carry CGL insurance. The primary purpose of this construction insurance is to protect the insured party if a job site accident causes property damage, bodily injury or personal injury to a third party.
In the event of a claim, CGL insurance covers the insured party’s legal obligation to pay compensatory damages to third parties.
Equipment coverage & wrap-up insurance
Insurance considerations for contractors:
- Contractors’ equipment coverage will protect equipment wherever it is located.
- Project-specific coverage protects new construction, including the new building during construction, and can protect you from loss of income, soft cost, testing of permanent equipment (elevators), etc.
- Project-specific liability insurance, also known as Wrap-up Liability Insurance, which will protect all parties connected to the project.
Types of contractor & construction coverage
- Depending on the type of construction project and the responsibilities of the various parties, businesses may face additional exposures.
- Builders risk or installation floater insurance.
- Businesses should also consider builder’s risk or an installation floater insurance policy. This helps to protect the property, equipment, and materials for work in progress.
- Wrap-up liability insurance programs.
Wrap-up insurance programs
As an alternative to each party obtaining separate liability policies, project owners and general contractors can turn to a wrap-up insurance program to manage risks. Wrap-up programs are centralized insurance and loss control programs intended to protect the project owner, general contractor and subcontractors under a single insurance policy for the construction project. Wrap-up policies are typically placed for a term encompassing the construction period of a project, plus an additional number of years after completion to deal with any issues arising during the warranty period.
Contractor tools & equipment
Contractors’ equipment insurance sometimes referred to as tool/equipment floater insurance is insurance that provides protection for equipment and tools that are easily transported from one location to the next. These policies provide coverage for the direct physical damage and loss to mobile tools, machinery, and equipment used to complete projects.
Equipment breakdown insurance
In the construction industry, businesses also face the risk of equipment breaking down or becoming damaged during construction. Equipment breakdown insurance, traditionally called boiler and machinery insurance, covers loss resulting from the accidental breakdown of almost any type of equipment.
Common examples include:
- Steam boilers and other pressure vessels
- Electrical generating and transmitting equipment
- Pumps, compressors, turbines and engines
- Air conditioning and refrigeration systems
- Production machinery used in manufacturing operations
- All types of electrically powered office equipment, such as copiers, computers and telephone systems.
Protect against environmental risks
Many businesses in the construction industry wrongly assume that unless they are engaging in environmental remediation work, they have no pollution liability exposures. Virtually every CGL policy contains a pollution liability exclusion. It’s therefore imperative that a business understands the scope of pollution liability coverage under its CGL policy. There are also environmental risks that should be addressed in your coverage, such as:
- Fuel storage tanks
- Off-premise spills on projects or third-party sites
- Asbestos and/or mold removal
Given the complex and specialized nature of modern-day construction projects, it’s imperative that businesses involved with such projects conduct a thorough overview of contractor and construction insurance. Doing so will help protect their bottom lines and provide peace of mind. Reliance can help with a risk assessment and recommendations for your business.
Reliance will ensure you have the necessary protection after reviewing your operations, current and future projects.
You may need:
Bonds and Surety
Don't let a surety bond requirement hold you back from expansion.
Building, Equipment & Stock
Your livelihood is dependent on the survival of your business.
Prevent loss of income if your premises are damaged.
Equipment breakdown insurance can cover equipment losses due to power surges, short circuits, electric arcing and more.
Reliance Insurance has been our broker for over 10 years and we are extremely pleased with their service. They've been exceptionally helpful in dealing with contracts with our customers and have handled all claims very professionally. They make dealing with our insurance needs pain free. Selecting Reliance as our broker was one the best decisions we have made.
— Controller, Frontier Power Products Ltd
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