4-minute read
Tight deadlines, hazardous work environments, costly equipment, and project delays. They’re all part and parcel of life in the construction industry.
Insurance can help general contractors and subcontractors cope with these issues. But off-the-shelf policies often fall short.
Tailored insurance solutions are the better route. We’re talking about specific coverage like builder’s risk for project sites, pollution liability for environmental concerns, and completed operations insurance to handle post-construction risks.
This approach ensures each project is protected based on its unique circumstances.
Comprehensive Coverage for Equipment and Tools
Let’s start with equipment theft, which is a costly problem in construction.
Traditional property policies may not cover tools or materials stored at multiple job sites. Custom insurance policies allow companies to protect expensive machinery, tools, and materials wherever they are, whether on-site or in transit.
Inland marine insurance, often part of a customized construction plan, provides coverage for mobile equipment and valuable materials. It’s particularly useful for contractors who need flexibility and comprehensive protection for items frequently moved from one location to another.
Managing Subcontractor Risks
Hiring subcontractors is common practice, but it introduces an additional layer of liability. Without the right insurance provisions, general contractors can find themselves held liable for subcontractor negligence or accidents.
A tailored plan can address this risk through subcontractor default insurance or endorsements that protect the primary contractor from unexpected subcontractor-related expenses.
Customized policies also can include endorsements that hold subcontractors accountable and manage potential gaps in their coverage. This shields the primary contractor from costs due to subcontractor errors, delays, or damage.
Protection Against Construction Defect Claims
Construction defect claims are always a risk for contractors. These claims can arise years after project completion, and they often result in expensive lawsuits.
Off-the-shelf general liability insurance might not extend to cover these specific claims, potentially leaving contractors exposed to significant losses. Professional liability or contractor’s errors and omissions (E&O) insurance can be included in a tailored plan to cover construction defect claims. This helps protect the contractor’s reputation and finances if defects arise down the line.
Adapting to Regulatory Changes and Compliance Requirements
The construction industry is heavily regulated, with specific insurance requirements set by states, local governments, and even clients.
Failing to meet these requirements can delay projects and jeopardize future business opportunities.
Customized insurance plans can be adjusted as needed to stay compliant with evolving regulations, helping contractors avoid costly delays or fines.
Tailored policies can provide the flexibility to meet project-specific or regional regulatory standards. For example, some contracts may require higher liability limits or additional coverage types, like umbrella insurance, that a generic policy wouldn’t automatically include.
The Bottom Line: Custom Insurance for Lasting Security
We know that construction can be a high stakes proposition with constant change, making flexible, targeted insurance solutions essential.
A customized insurance plan not only provides broader protection but also aligns with your business’s unique projects, equipment needs, subcontractor relationships, and compliance demands.
Work with a broker who understands the construction sector, so that you can secure the right blend of coverage to build a foundation for long-term success and resilience.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the U.S. For more information, visit our website or call 877-440-3304.
This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.