Any company involved in construction work, building maintenance or installation and repair services is in need of contractors insurance. Contractors will be ill-advised to forego contractor insurance in a climate of high crime statistics, unpredictable weather conditions, negligent workers, faulty equipment, defective materials and a million and one other thing that can go wrong in the contracting business.
There is also an ever-growing propensity to be held responsible and accountable for damages caused to third parties. Think about it this way: Insurance premiums cost a mere fraction of stolen materials, damaged projects or compensating clients or third parties for losses incurred through the negligence of workers or the forces of nature beyond anyone’s control. By having the prudence and foresight to take out builders’ insurance, contracting businesses are safeguarding themselves against possible losses and lawsuits that could end up by severely crippling the company financially or, in the worst case scenario, even bankrupting it. A contractor’s policy actually costs very little in terms of premiums and is worth its weight in gold.
The basics of builder’s insurance
1. Builders’ Risk Coverage (also known as construction coverage)
Builders’ risk insurance indemnifies the contractor for losses or damages to a building while the building is under construction. Insurance usually covers the building for a specific time period and applies only while the building is under construction. This type of insurance usually covers fire damage and vandalism. The policy may also include materials in transit to the building site as well as materials and equipment stored on site. Tools, equipment, vehicles, materials and any other assets used on site may also be covered. For the amount of protection it affords (and the peace of mind that goes with it) builder’s risk insurance is relatively inexpensive (as against general liability insurance).
2. Insuring Materials on site and in transit
Given the cost of modern building materials, it is common practice for constructors to insure their materials either on site or while in transit. However, the onus is on builders to make sure that all reasonable precautions are in place to protect materials from theft or storm damage as much as possible. This coverage can also include materials stolen in transit due to the vehicle being hijacked while en route to the building site.
3. The most common insurance claims made by contractors
The most frequent claims made by contractors entail materials theft, damaged materials while in transit, storm damage, or surrounding properties being damaged while construction is in progress.
4. Most expensive Claims
The most costly claims most commonly filed by contractor are usually damages incurred by third parties and their properties due to the contractor’s “negligence” for example, materials being blown off structures in storms or high winds and landing on nearby cars or buildings. Also damage caused to existing underground pipes or cables. Other high claims are damages caused by fire, rainwater damage to structures, lightning damage or severe storm damage. All these liabilities can be covered by an All Risks contractor’s policy.