Which Types of Insurance Do You Need for Construction?

Construction is serious business. If your contracting company regularly erects or renovates buildings in Sioux Falls, Brandon, Tea, Harrisburg, Hartford, Dell Rapids and surrounding areas, then you already know what’s at stake with each project. If your valuable tools, equipment and materials are stolen, damaged or defective, the outcome could seriously jeopardize your bottom line. Likewise, an injury to one of your crew members – or someone who isn’t even involved in the project – could prove devastating to your business.

A contractor’s success hinges on their ability to focus their undivided attention on every project they undertake. You shouldn’t have to worry about the financial implications of accidents and other unexpected setbacks. That is why every forward-thinking contractor needs insurance. It creates indispensable peace of mind that your business will remain viable in the event of an unfortunate event!

The exact types of insurance you will need for construction varies. That said, comprehensive contractor liability insurance typically includes the following coverages.

General Liability Insurance

There are approximately 150,000 construction site accident injuries every year. Over 1,000 of those injuries are fatal, which accounts for one in five annual workplace deaths in the United States.

This is only to underline what a contractor already knows: construction can be dangerous. General liability insurance is designed to address that reality. In addition to covering the contractor in the event of bodily injury, it also covers damage that is accidentally done to their clients’ properties. General liability insurance can also cover libel – i.e. a lawsuit that is raised against a third party (such as a rival contracting business) when it publishes a false and damaging statement.

Workers’ Compensation Insurance

Workers’ compensation imburses an employee for lost wages, medical expenses and rehabilitation costs when they fall ill or are injured in the course of their job. Workers’ comp insurance, which goes into effect when an employee files a workers’ comp claim, is an invaluable type of coverage for any type of business – especially one that is dedicated to an inherently dangerous industry, such as construction.

Although employers in the state of South Dakota aren’t required to have workers’ comp insurance, they are not exempt from the federal law that protects sick and injured workers’ rights to file claims. If the civil court deems that an uninsured employer is liable for their employee’s medical expenses and lost wages, that employer will have to pay out of pocket. The average workers’ comp claim is over $40,000 – an expense that could prove ruinous to any small business owner if they aren’t covered.

Commercial Property Insurance

Whereas general liability covers damage that a contractor’s crew may accidentally inflict on someone else’s property, commercial property insurance covers damage to the contractor’s own property.

It’s easy to appreciate the necessity of property insurance. If you own a construction company, you likely have a large physical location that stores expensive vehicles, tools, equipment and materials. Commercial property insurance covers both the building and its contents in the event they are damaged, lost or destroyed by perils such as fire, theft and vandalism.

Property insurance typically offers the policyholder the choice of receiving cash or replacement value of damaged or stolen items. An actual cash value policy is more affordable, although the amount it pays out normally isn’t enough to replace lost items with brand new ones.

Business Vehicle Insurance

Unless you are Amish, your construction business must include at least one vehicle. That is why it must also include business vehicle (aka commercial auto) insurance. In addition to liability damages, it can cover damage to your vehicles, medical expenses incurred by the occupants of your vehicles, and damages done by underinsured or uninsured motorists.

Business vehicle insurance typically covers both bodily injury and property damage, but it doesn’t necessarily exclusively cover damage resulting from auto accidents. When it is comprehensive, it also covers damage from weather, theft and other causes that aren’t related to collisions.

Builder’s Risk Insurance

Although it is commonly part of a contractor’s general liability insurance, it is a good idea to make certain your policy includes builder’s risk insurance. In essence, it protects the contractor’s materials, tools and equipment while they are being used or stored at the job site. Builder’s risk insurance is especially advisable during this current era of rising theft.

Whether you are just entering the contracting business or are already established in the industry, it is wise to make certain that you are fully insured against every potential threat to your profitability. We welcome you to contact McKinneyOlson Insurance today for all your insurance needs in the greater Sioux Falls, SD area. Protecting local business people has been our business since our foundation in 1880!