Monday, July 18, 2016

Construction Insurance FAQs

The construction industry is high-risk. As the owner of a construction business, it's important that you make sure you have the proper coverage. Talking with a Lake of the Ozarks insurance agent in regards to your policy is the best way to make sure you've got every aspect of your business protected. Below are the answers to the some of the most common questions we get regarding construction insurance. 

1. What are the main types of construction insurance policies?

Most contractors start off by purchasing a General Liability policy that protects them in the event of a claim where they cause bodily injury or property damage to another party.  This policy also covered the insured for their products and completed operations exposure once they have left the job site.
After the GL policy is in place most contractors purchase Workers Compensation coverage to protect their employees in the event of an injury.  Most subcontractors are required to have both General Liability and Workers Compensation coverage in order to work on behalf of another contractor.
Other coverage considerations are property coverage for your contents, inland marine coverage for your tool floater and coverage for employee tools.  You may also have commercial auto exposure to consider including hired and non-owned auto liability.

2. Who needs construction insurance?

Construction insurance is an essential purchase for any builder, contractor, and construction company or construction manager. Considering the fickle nature of the construction industry, insurance can be comprehensive and cover a multitude of possible problems. The cost of solving these problems is normally many times the cost of the insurance premium. This is why construction insurance is an essential part of a construction budget.

3. What typically does a construction insurance policy cover?

Construction insurance can cover equipment and property in the case of accidental damage, theft and weather. Regardless of the size of your project and the number of people on your team, you can have piece of mind by have a complete construction insurance package.

4.  What typically does a construction insurance policy not cover?

The transportation of building materials from warehouse to building site is not normally covered, but may be available as part of a cargo policy or installation floater. Construction insurance does not cover any extra costs incurred due to delayed completion of the project regardless of the reason for delay.

5. How much construction insurance typically cost?

Cost of insurance will be dictated by size and scope of your operation.  The premium for a drywall installer with 2 employees and $100,000 in receipts is going to cost less than a roofing contractor with 10 employees and $500,000 in gross receipts.  The General Liability is normally based on type of work performed and gross receipts while the workers compensation is based on work performed and payroll.  Job duties with higher risk typically have a higher rating factor, so if you have employees doing multiple job types it may be a good business decision to separate their payroll by jobs performed otherwise their payroll will get lumped unto the highest class.

6. What are the most common problems with insurance policies?

Many policies are written without the insured's proper understanding of how claims affect your future premiums.  The Workers Compensation policies may have an Experience Mod Factor that can either help or hurt your premium payments in the future.  This factor is based on the frequency and severity of claims turned in for your job class over a period of time.  Work with your agent to resolve repeat injury types and this will help lower your mod in the future.

7. What additional coverage is needed? 

Builders Risk insurance covers the property until it is built, but does not cover subsequent problems the building may experience due to errors in workmanship.
You may also want to look into professional liability coverage if available in your construction class.  This could be very important when you are drawing up plans and documents to be used in projects.

At Insure the Lake, we have specialists to answer all your questions in regards to construction insurance at the Lake of the Ozarks. For all your insurance needs, choose the best insurance company at the Lake of the Ozarks. From personal auto and home policies to business policies, we've got you covered! Give us a call at 573-348-2794 with any questions you may have.

Request a Free Quote Online! Contact Insure the Lake today for all your Lake of the Ozarks insurance needs! 

About the Author: Steve is a double back-flip insurance ninja. He was named Young Insurance Agent of the Year by the Missouri Association of Insurance Agents in 2010 and is a Certified Insurance Counselor. When he is not helping customers, he enjoys community service, Latin dancing with his beautiful wife and going on adventures with his two awesome sons.

Steve Naught, CIC
3736 Osage Beach Parkway
Osage Beach, MO 65065
Next to Golden Coral