Insurance in the Construction Industry

The construction industry is a high-risk industry, and as such, it is important for general contractors and subcontractors to have the right insurance coverage. There are a variety of different types of insurance policies that are available to construction businesses, and the specific policies that are needed will vary depending on the size and scope of the project.

General Liability Insurance

General liability insurance is one of the most important types of insurance for construction businesses. This type of insurance covers damages that are caused to third parties, such as property damage or bodily injury. General liability insurance is typically required by property owners and lenders, and it is also a good idea to have this type of insurance in case of an unexpected accident.

Workers' Compensation Insurance

Workers' compensation insurance is another important type of insurance for construction businesses. This type of insurance covers the costs of medical care and lost wages for employees who are injured on the job. Workers' compensation insurance is required by law in most states, and it is also a good way to protect your business from financial losses in the event of an employee injury.

Commercial Auto Insurance

If your construction business owns or leases vehicles, you will need to have commercial auto insurance. This type of insurance covers the costs of damage to property or people that is caused by your vehicles. Commercial auto insurance is also required by law in most states.

Builder's Risk Insurance

Builder's risk insurance is a type of insurance that covers damage to materials and equipment that is stored on a construction site. This type of insurance is important to have in case of a fire, theft, or other unforeseen event.

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance, protects construction businesses from claims of negligence. This type of insurance is important for businesses that provide professional services, such as architects, engineers, and surveyors.

Contractor's Surety Bond

A contractor's surety bond is a type of insurance that guarantees that a contractor will complete a project according to the terms of the contract. This type of bond is typically required by property owners and lenders.

The cost of construction insurance will vary depending on the type of insurance, the size of the business, and the specific risks involved. However, in general, construction insurance is a relatively affordable way to protect your business from financial losses.

How Insurance is Accounted for in a Construction Estimate

The cost of insurance is typically accounted for in a construction estimate by adding a percentage to the overall cost of the project. The percentage that is added will vary depending on the type of insurance and the specific risks involved. For example, the cost of general liability insurance is typically added as a percentage of the total project cost, while the cost of workers' compensation insurance is typically added as a flat rate per employee.

It is important to note that the cost of insurance can fluctuate over time, so it is important to get quotes from multiple insurance companies before finalizing your construction estimate.