It isn’t easy to be successful in the construction industry. Not many contractors can take a financial hit. One lawsuit can be the difference between staying in business and closing down. If this is you, you are not alone. With so much at stake, the pressure of finding the necessary coverage can be stressful and confusing.
So, what do you do?
Two cornerstones of any insurance program are Builder’s Risk and Contractor’s Liability. Are you clear on the differences? In this article, we’re going to discuss the main ways these polices differ.
Liability coverage is more necessary than ever. US clients are quick to sue for property damage or bodily injury.
So, Contractors Liability is essential given that there are unending opportunities for liability claims on any construction site. A third-party claim can happen any day of the week. You can put in the best safety precautions, but you can’t stop all accidents.
Digging trenches, re-roofing, or operating heavy vehicles all present many chances for accidents. Expect a liability claim if you or your employees cause damage to someone else’s property. Also if you cause bodily injury to a site visitor.
This is just a fact of the industry, despite rigorous risk management. The work is dangerous and slip-ups happen. When there is an error, your Contractors Liability Insurance offsets the losses so you aren’t hit with a massive bill.
Builder’s Risk is insurance for a building under construction. It covers the construction and materials against damages caused by ‘external’ events like storms, fire, theft or vandalism.
For any construction site, these can be huge problems. Wind is the most common. In fact, wind is responsible for 28% of Builder’s Risk claims. Construction site fires are considered an extreme cause of loss because the devastation they wreak is so severe. But whatever happens, you need to protect your property.
Think about the fact that Contractors Liability does not protect your project against these risks. Builder’s Risk insurance starts to make more sense, doesn’t it?
Another key difference between Contractors Liability and Builder’s Risk is how and when these policies are activated. Contractors Liability is day to day coverage that goes with you from one work site to the next. Builder’s Risk is project-specific. It is coverage for one project only.
You are unlikely to be allowed to set a foot on a building site without Contractors Liability. After all, the property owner, developer or General Contractor do not want to be liable for liability claims that should be for your pocket.
However, there are limits on each type of loss the policy covers. For instance, the minimum for property damage and personal harm combined is $1,000,000. This goes towards repairs, replacements, legal fees and medical costs.
In addition, no two businesses are exactly alike. Consequently, your coverage must be customized according to your risks.
Builder’s Risk provides insurance for a building under construction. If any listed events occur, Builder’s Risk can be triggered without requiring a formal claim.
Most policies include weather events, arson, theft and vandalism. But there’s much flexibility, depending on the specific risks of your job. Extensions cover water damage, property in transit and temporary structures.
And, at only 1-5% of total costs, it makes good business sense.
Both Builder’s Risk and Contractors Liability should be customized to cover your risks. In both cases, it can be difficult to know if you have the best possible insurance at the best rate. No business owner wants to pay top rates for coverage they don’t actually need.
Let’s consider the facts. Firstly, now that you know about Builder’s Risk you can make an informed decision. Secondly, at very least you will know which questions to ask.
Third, this short guide has also shown some of the benefits of Contractors Liability. If you already have this coverage, it may be time to reassess your policy. Your business could have grown. Are you still properly covered?
So, whether you need new insurance or to reassess your current coverage, come to the experts. Call Builder’s Risk at 887 960 0221 to find out more.