What is Construction Insurance?
Construction insurance is a special insurance that is designed specifically for construction companies and for contractors. This insurance will cover the risks that are involved during any construction process that is taken up by the contractor or the construction company. Construction insurance is mandatory for construction companies before they can bid for any construction work in some states. The type of insurance and the coverage amount that the construction company should have will be decided by the states and tend to vary from one state to the other.
Types of Construction Insurance
Construction insurance policies can be categorized into three main categories. They are
- Liability insurance
- Property Insurance
- Surety bonds
Construction companies are required to cover various aspects of the construction process through insurance policies. Various parties who are associated with the construction project have to be protected and hence the need for construction insurance. Construction companies take both first party and third party insurance policies to ensure that they are able to cover most of the liabilities that can occur during any construction process.
The following are the types of insurance that is used in the construction industry. This classification is based on the type of liability that the construction company can endure during the construction process.
- Builder’s Risk:
- Workers Compensation
- Commercial General Liability
- Contactors Pollution Liability
- Automobile Insurance
This insurance will protect the construction company or the contractor from any loss that incurs due to the damage of the project during the construction process. By checking out the following link, you will be able to get detailed information regarding builder’s risk insurance http://en.wikipedia.org/wiki/Builder’s_risk_insurance.
This insurance is required by most states to cover for any injuries that might befall on the employees while working on the project.
This is a type of liability insurance that will protect the construction company or the contractor from any claim that is raised by third parties who have suffered personal injuries or damage to their property due to the construction project.
There has been a lot of emphasis given on pollution that happens during any construction project. If the construction company or the contactor is not careful, they will have to pay for environmental damages caused doe to the project. To help cover such claims, contactors opt for the pollution liability insurance.
General automotive insurance will not cover the automotives and heavy equipment that are used in the construction business. Specialized automobile insurance has to be taken for vehicles that are used on any construction site. This insurance will cover any claims that might arise due to injuries or damage to property caused by these vehicles.
The insurance policies that are taken by the construction companies and the contractors will differ based on the state and the type of construction project. Let us have a look at the five common types of construction insurance policies that are opted by the contractors and construction companies.
- All risks insurance
- Professional indemnity insurance
- Latent defects insurance
- Public liability insurance
- Product liability insurance
Gemma-Leigh Garner is freelance blogger who has been closely studying the construction industry for a few years. Her research is primarily on construction insurance policies taken by contactors and construction companies for their construction projects.