Who Should Purchase Construction Insurance?

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Construction insurance is needed for those operating a building company to provide the necessary protection from claims, losses, or accidents associated with performing work duties. This type of insurance covers claims arising from incidents that occur both on and off-site involving property, workers or the general public. Claims made in connection with construction incidents or property damage can be costly, so businesses must have the correct cover.

Homebuilders, building companies, and property developers should all have construction insurance before performing any building work. General building contractors, specialised contractors, and home improvement companies will also need to purchase construction insurance to provide the correct protection.

For large projects that involve many companies, each one will need their own insurance to protect them. Even if the main building contractor working on the project has the necessary insurance, smaller sub-contractors, sole-traders, or small businesses working on the site will also need to have their own insurance cover in place.

What does construction insurance cover?

Construction insurance incorporates several types of coverage under one heading. It is an efficient way to include several protections under one umbrella policy. This makes policy renewals and premiums easier to manage – one policy, one monthly or yearly payment.

For most standard construction policies, cover is provided against claims for things such as:

  • Property Damage
  • Loss of Income
  • Liability Claims
  • Employee Injuries
  • Latent Defects
  • Equipment theft or damage
  • Vehicle theft or damage

Typical coverage includes public liability insurance, workers compensation, and tools and equipment coverage. Along with the standard insurances, policies may be included to insure against problems arising from specialised work. Pollution insurance, extra expense insurance, and other special protections may be added to the policy as needed.

Once buildings have been constructed, they are around for a long time, but should there be an issue caused by the construction or the materials used, the building company that performed the work could still be liable. Latent defects insurance provides cover against issues arising in the future from any problems that arise.

Flood insurance, which was once not so common, is being added to construction policies as changing weather systems, higher rainfall, and climate change are increasingly responsible for insurance claims caused by problems with flooding. The insurance industry is facing a larger number of flood claims each year, and construction companies are including it along with their standard construction insurance coverage.

Why is construction insurance important?

Building work can be extremely hazardous; the risk of damage, accidents, injuries, and even death can be much higher than in other business types. Therefore construction companies must have the appropriate levels of insurance to protect their business from claims and, in the event of being found at fault, cover any large settlement payments that are awarded.

As well as protecting from large claims leveraged against a company, some insurances are a legal requirement. Any company that has employees, for example, will need to maintain employers’ liability insurance to protect their workers from accidents or injuries.

While some policies are not required by law, it still makes good sense for companies to have them, as in the case of public liability insurance. This insurance protects a business and its owners from personal financial liability from any claims made by a third party against the business for injury or damage to property caused by building operations.

Insurance may be required when performing work for certain clients. Many large organisations ask for a minimum level of coverage before building work can commence. This can often be seen with government offices or local authority building projects. Building contractors may be expected to provide proof of coverage and maintain minimum protection limits. These types may also require annual verification of insurance of businesses.

How to compare construction insurance quotes?

For building companies that need to acquire construction insurance policies, quotes can be obtained from many sources.

  • Existing insurance provider
  • An insurance broker
  • Directly from providers
  • A comparison engine

For most policy buyers, the number of quotes received from brokers and other insurance companies can be limited. A comparison engine is the best choice for construction insurance shopping for a wider range of products and options.

Where insurance providers and direct purchasing can be limited to the insurer’s product, comparison engines provide many quotes from many different insurance providers (e.g. both brokers and insurers).

Brokers and comparison sites are particularly useful for businesses unsure of their exact insurance needs or those who don’t have an existing relationship with a business insurance company. Both can connect a company with multiple insurance providers, saving time and helping buyers find the best deal for their construction company. These side-by-side comparisons allow each insurance quote to be carefully assessed while reviewing things like coverage limits and excess amounts. Companies will need to ensure they have appropriate levels of protection and the correct policies, including any specialised coverage.

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