Contractors & Construction

The construction industry is a big contributor to the local and national economy. With big industries and opportunities also come big risks and pressure on the owner and management group’s time to properly manage them. Contractors, both general and sub-trade, face a wide variety of exposures in their work, which requires an insurance program that protects the company and owners against the multitude of possible concerns. We all know accidents or other unforeseen events can 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 contactors and construction insurance coverage

Commercial general liability insurance is a requirement for a contractor, and it is crucial that the construction insurance policy provide appropriate coverage – not only is it is important for your peace of mind, most of your clients will require proof of insurance.

The only way to effectively protect the assets of your business is to carry adequate commercial general liability insurance. In today's world most construction contracts require businesses participating in a job to carry CGL insurance. The primary purpose this type of 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.

There are a number of aspects of insurance for contractors to consider:

  • Contractors’ equipment coverage will protect your equipment wherever it is located
  • Project-specific coverage will protect new construction, including the new building during the construction period, 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.

Other important types of contractors and construction insurance coverage

Depending on the type of construction project and the responsibilities of the various parties involved, businesses may face additional exposures.

Builders risk or installation floater insurance

Businesses should also consider builders risk or an installation floater Insurance policy. This will help to protect the property, equipment, and materials for work in progress.

Wrap-up liability insurance programs

As an alternative to having each party obtain separate liability policies, project owners and general contractors can turn to a wrap-up insurance program to manage risks. Wrap-up insurance programs are centralized insurance and loss control programs intended to protect the project owner, general contractor and subcontractors under a single insurance policy or set of policies for the construction project. Wrap-up policies are typically placed for a term encompassing the period of construction of a project, plus an additional number of years after completion to deal with any issues arising during the warranty period.

Contractors tools & equipment insurance

Contractors equipment insurance sometimes referred to as tool/equipment floater insurance, is a form insurance that provides protection for equipment and tools that are easily transported from one location to the next. Such policies provide coverage for the direct physical damage and loss to mobile tools, machinery, and equipment that is used to complete projects.

Equipment Breakdown Insurance

In the construction industry, businesses also face the risk of equipment breaking down or becoming damaged during the course of construction. Equipment breakdown insurance, traditionally called boiler and machinery insurance, covers loss resulting from the accidental breakdown of almost any type of equipment. Some common examples of such equipment 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; and 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. Therefore, it is 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-premises spills on projects or third-party sites
  • Asbestos and/or mold removal

Given the complex and specialized nature of modern-day construction projects, it is 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.

At Reliance Insurance, we can provide a thorough review of your operations, projects underway and future projects and related insurance requirements. Use our expertise to ensure that you and your project have the necessary protection.


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