The Kinds of Insurance a Construction Contractor Needs

Insurance can be a tricky matter in the construction industry, since the industry itself is full of risks. You have no guarantee before the start of the project that everything will go like clockwork, none of your workers will get hurt, and none of your machines will break down or cause property damage through an accident. This is why contractors always need to be up to speed with the best types of insurance policies they can choose to protect both themselves and their clients.

Types of Insurance to Consider

• Builder’s risk insurance has to do with physical damages at the construction site. The policy will pay for damages up to a specified coverage limit. This will be determined through the sum of the completed value of the structure, taking into account labor and material costs, but not land value.
• Public liability is provided to protect builders, contractors and remodeling workers against liability in projects where property damage, accidents and injuries may occur.
• Professional indemnity insurance keeps contractors responsible of any personal negligence and accounts in which negligence causes design and construction problems, or prevent the project from complying with the standards expressed by the construction contract.
• Worker’s compensation insurance protects the contractor from being made accountable for the personal injury or death of a worker during a construction project.

Other Agreements and Considerations

Of course, there are many other cases where unforeseen events can get in the way of a construction project’s proper completion, and, in such cases, additional guarantees have to be made as well.

One of them is the performance bond which is issued in most cases by an insurer or a bank to guarantee the satisfactory completion of a construction project. Another is the Hold Harmless agreement which comes into action when a subcontractor is present. The agreement will minimize the chance of a litigation by insuring against all work performed by the contractor.

These are just some of the ways insurance improves and streamlines the construction process, ensuring that everything goes smoothly until the completion of any given project.

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