Though it may not feel like it right now with the current stay at home orders, the market will once again pick up. Businesses who paused projects or expansion plans will want to resume work, and homeowners who paused renovations will want to get projects scheduled.
Time on Your Hands Now, Time at a Premium Later
Understandably, until that happens, you may have a bit of time on your hands to look at where you stand so that you can be ready to deliver for your clients, because when the rebound comes, you’re going to have less time to do more work before winter comes again.
Rebounds Mean Increased Workloads: Preparing for the Unexpected
If this is the case, increased workload often ends up with working faster and more reliance on subcontractors.
Faster work means increased risk, reliance on subcontractors means less control, and even if you only employ and work with the best in the business, you already know that the unexpected happens. Maybe a nail goes where it shouldn’t, a pipe leaks, or a necessary person for a job calls in sick when they’re needed most.
But those are the kind of unexpected events that are easy to overcome. The ones that can hurt your business are the major events—such as an accident on a worksite, a worker gets injured on the job, or a major theft occurs on a jobsite. That’s where insurance comes in.
Navigating the Contractor Insurance Landscape
Whether insurance was required to take a job, or you purchased it to protect yourself, you likely have some kind of insurance. But… just because you have contractors’ insurance doesn’t mean you think about it that much—or even know what it covers (and what it doesn’t).
In fact, you probably spend more time thinking about your subcontractors’ insurance policies than you do your own. At least you should, as we discussed in our articles, The Importance of Being Earnest (about Subcontractors) and Navigating Contractual Risk Transfer to Subcontractors.
After all, that’s the nature of insurance. Just like you can’t get a homeowner’s policy after the house burns down or a life insurance policy after you die, the point of buying insurance is to protect your business before the unexpected occurs.
Six Types of Insurance Policies Contractors Rely on
There are several types of policies contractors should consider to fully protect their business, equipment and employees. Here are a few of the coverages available and what they cover.
A broad policy that covers businesses, this would be the policy you think of when you say “we’re insured.” General Liability provides three distinct types of coverage:
- Legal Liability for Injury and Property Damage: The first coverage type under a general liability policy, this is used to protect your business in the event of a third party claim or lawsuit alleging bodily injury or property damage as a result of a condition at the business premises or as a result of an action or inaction by the business or one of its employees.
- Legal Liability for Personal or Advertising Injury: The second coverage type provides liability coverage in the event the business is sued for personal or advertising injury, such as libel, slander or infringing on copyrights, to name a few examples.
- Medical Payments: The third type of coverage covers medical payments that are incurred by a non-employee as a result of an accident at the business’s premises.
It is important to have a carrier who understands the seriousness of a general liability claim and who can handle it competently in order to mitigate the potential loss. This includes the prompt investigation of a claim as soon as it is reported, and timely arranging for defense counsel to defend against a lawsuit arising out of claims under the policy.
Workers’ Compensation insurance is designed to provide benefits to covered employees who are injured, become ill or are killed in the course and scope of their employment.. In most states, this coverage exists to serve as the employees’ ‘exclusive remedy’ for work related injuries or illnesses which means it protects employers from being sued when workers are injured.
Workers’ compensation coverage pays for medical expenses incurred as a result of a work related injury as well as a portion of the injured workers’ wages during the recovery period. That said, in order to expedite claims and deliver proper service, choosing the right carrier matters.
Learn more about this type of coverage in Why Is It Important to Report Workers’ Comp Claims Promptly?
Commercial auto insurance is a policy for vehicles used for business rather than for personal use. Like a personal auto policy, commercial auto insurance covers property damage to the vehicle itself as well as liability coverage for damage or injury to others. This type of policy can also provide uninsured/underinsured motorist coverage for the people in the vehicle.
Additionally, if you don’t supply your workers with vehicles, non-owned automobile insurance could benefit you. This type of coverage protects the company from the liability of losses sustained by an employee driving a non-owned automobile on company business.
Inland Marine Equipment Coverage
Another coverage relied on by construction companies and contractors is inland marine coverage. Inland Marine policies refer to coverage for specialized property including that which is used in construction.
As a contractor, inland marine insurance may include the following:
A Builders’ Risk insurance policy offers protection to a commercial or residential building that is in the process of being constructed or renovated in case of damage or loss to the structure while construction is underway.
Property, Equipment, and Specialized Equipment
When the equipment and property you own not only moves with your business but is generally left on the jobsite, it’s exposed to the unexpected. Equipment gets vandalized, and tools and materials get stolen or damaged.
Considered one of the most important coverage options for any business, property and equipment insurance is vital for contractors.
Contractors’ equipment insurance is an insurance policy that covers specific equipment and tools owned or in possession of a contractor. It provides protection for tools and equipment against perils like fire, theft, vandalism, and flood, among others. Additionally, specialized equipment coverage can be built around equipment with specific characteristics.
Installation Floater Insurance is protection for contractors’ and subcontractors’ materials and work in progress. Installation Floaters are designed to protect the value of labor and materials of a contractor’s work in progress in the event that it is damaged by a covered peril. Available for commercial general contractors and both residential and commercial subcontractors, this may be offered on a project basis or on an open basis.
Umbrella liability insurance is an insurance policy that provides liability coverage in excess of the coverage specified in the underlying liability policy or policies, or it may also serve as a primary policy to cover losses other policies do not. For contractors, this would add additional limits of liability coverage beyond that provided in a general or auto liability policy.
Contractors’ Site Pollution coverage
While manufacturers need to stop pollution at their site, contractors need to avoid polluting wherever they work. This is where pollution liability coverage comes in. From environmental impact coverage to water pollution insurance, these protect against environmental impact losses incurred while completing a job.
Protect Your Firm with Contractors Insurance from Acadia
These are just a few of the many possible options for contractors who are looking to protect their business. However, your policies should be built around your unique needs. To get the coverage you need, you need to speak with someone who knows how to help. Please contact your local Acadia independent agent to learn more about our specific product offerings.
Contractors and subcontractors ranging from niche artisans to heavy contractors have turned to Acadia for decades. We understand how contractors work, the risks that come with this kind of work, and how to address their unique exposures.
Get to know more about our Contractors Insurance services, and get to know more about protecting your business with our Contractors Insurance Loss Control Toolbox.
Acadia is pleased to share this material for the benefit of its customers. Please note, however, that nothing herein should be construed as either legal advice or the provision of professional consulting services. This material is for informational purposes only, and while reasonable care has been utilized in compiling this information, no warranty or representation is made as to accuracy or completeness.
Products and services are provided by one or more insurance company subsidiaries of W. R. Berkley Corporation. Not all products and services are available in every jurisdiction, and the precise coverage afforded by any insurer is subject to the actual terms and conditions of the policies as issued.