As the owner of a construction business, you undoubtedly know that you need insurance to protect your assets from certain risks. However, you may not be clear about exactly what kind of business insurance your particular business needs.To help you sort out your options, here’s a brief overview of the types of coverage you may want to consider, and why.
First, Know Your Risk
Before you consider your insurance needs, it’s a good idea to take a look at the risks your company may face. As a rule, construction companies encounter four major types of risk.
- Property damage from fire, windstorms, theft or vandalism
- Loss of income due to a catastrophic event, such as a fire
- Liability claims for to injuries to non-employees or damage to their property
- Employee injuries, illnesses and deaths
Not every type of risk applies equally to every company. For example, if you don’t have employees, employee injuries are not going to be a concern. Similarly, if you’re a carpenter/handyman who works out of your home, you may little property to protect. (Although your homeowner’s policy will likely not cover your business assets, so it’s important to protect what you have!)
In general, however, almost every construction business needs liability and property coverage to some degree. How you choose to implement that coverage will depend to a great extent on the size of your business and how much you have to lose.
General liability insurance is the backbone of your business insurance coverage, and is required to get a contractor’s license in most states. It protects your assets in the event you are liable for a bodily injury or property damage claim.
Suppose, for example, the owner of a home where you are remodeling the kitchen trips over an electrical cord your worker left on the floor and breaks her arm. Your general liability insurance would pick up the tab for her medical bills and physical therapy. It would also protect you if you or your worker damages the owner’s property by mistake.
Just like it sounds, property insurance covers your business property if it is damaged or destroyed by a “covered event,” such as a fire, severe storm, or theft. Typically, this type of business insurance covers the physical premises where you conduct business. It also protects any adjacent storage areas and all of the contents these structures contain. The coverage typically applies to tools and equipment as well.
Depending on your circumstances, you may also want to add “inland marine” insurance to your business insurance plan. This type of policy (its name notwithstanding) covers tools and equipment while they’re in transit as well as mobile equipment, such as forklifts, backhoes and bulldozers.
Builder’s Risk Insurance
Builder’s risk is a type of inland marine insurance that covers buildings that are under construction. Depending on your policy, it may also cover materials on the job site at the time the loss occurs.
Business Income Insurance
Business income insurance is a type of business insurance that reimburses you for your net income losses if you are forced to temporarily stop operations due to a covered event (for example, a fire.) It covers operating expenses such as payroll and costs associated with relocating, typically for up to 12 months.
Workers Compensation Insurance
If you have employees, most states require that you carry workers compensation insurance. This no-fault coverage will pay a worker’s medical expenses and a portion of their lost wages in the event they are injured on the job. It also applies in cases of illness due to job-related exposures.
Business Automobile Insurance
Whether you use your personal vehicle for business purposes or you own several business automobiles, you need a commercial automobile policy. This coverage protects you in the event you or an employee causes personal injury or property damage in a crash.
Get Expert Advice
Choosing the best blend of business insurance coverage may seem like a simple task. But you run the risk of under-insuring your business or paying for coverage you don’t need if you don’t seek out expert advice. At The Carmoon Group, we’ve been helping small businesses get the best coverage for nearly 20 years. Give us a call or contact us online today and let us design a program tailored to your unique needs.