When you are a contractor or own a construction business, you want your business to be solid. Smart. No mistakes. No accidents...and certainly no reasons to throw away hard-earned money.
But if you haven’t given some careful thought to your business insurance coverage, you could throwing that money right in the trash.
So it is worth taking a moment to pause and consider...
Are you making any of these construction insurance blunders?
1. Thinking General Liability is Enough
You need general liability no matter what kind of business you run. But for a construction business or independent contractor, general liability insurance is crucial.
General liability protects your business assets (and personal assets if you are a sole proprietor) from the high cost of a lawsuit.
Even the most safety-focused, cautious contractor runs the risk of a third-party (someone who doesn’t work for you) being injured or facing property damage during the normal course of your work.
Since construction jobsites bring even more risk of injury than other types of businesses, that means your chance of an accident and lawsuit are even higher.
When a lawsuit does happen, you don’t even need to be facing a judgement for huge costs to come your way. Attorney fees, court fees, witness fees, and court expenses can pile up fast. Not too mention the income you could lose while you are tied up in court.
If you have general liability coverage, your assets are protected.
But if you think that is the only insurance coverage you need to protect your business, you are making a big mistake.
This coverage is very important, but it only protects you from third-party lawsuits.
And you have so much more to lose.
2. Assuming Your Truck is Covered By Your Personal Auto Policy
How often do you use your truck, van, or SUV for work? The answer is probably...
If you are using a personal vehicle for work purposes, you may be surprised to discover that your personal auto insurance policy probably won’t cover an accident that happens in the course of business...
- If you have altered your personal truck to attach permanent toolboxes...
- If you let your employees drive your truck for work purposes
- If you haul a trailer full of equipment, tools, and supplies
- If you drive a vehicle owned or leased by your business
You need commercial auto insurance.
To put it simply, if you use a vehicle for work purposes in your construction business, then your contractors insurance needs to include commercial auto insurance.
Assuming your personal policy is covering your work truck is a big blunder that can cost you big money.
3. Not Protecting Your Tools & Equipment
What’s the one thing you need to complete every single job you bid on? Your tools. No matter what your specialty, you need your equipment and tools to do it.
Whatever your specific tools may be, painters brushes, lawnmowers, or pipe cutters, they are the single most important asset to your business (minus you, of course).
What if, on your way to a job one morning, you pulled your work truck up to a gas station to fill up? And let’s say that one morning your truck is hauling a small trailer with a couple of generators and some smaller, hand-held power tools to a new job site.
You run inside for a to-go cup of coffee, and to pay for your gas. You are only gone for 4 minutes.
But that’s enough time for someone to steal your equipment, bust the lock on the toolbox in your truck, and take off with your tools.
If you don’t want to pay for this unfortunate event out of your own pocket, you better be sure your tools and equipment are insured.
Inland marine, also known as tools and equipment insurance, is there to protect the things you need most as you are traveling to and from job sites. If you don’t have this vital part of your construction insurance coverage, you will be high and dry if something happens to your tools.
4. Ignoring Mother Nature
Sometimes it rains. And sometimes it pours. And sometimes a tree is ripped out of the ground by a gale force wind, and goes crashing right into the middle of the remodel project you are working on.
Crazy weather can cause flash floods, damaging hail, or high speed winds to rip through all of the progress you have made on a job. Lightning can strike, fires can start, and even natural disasters can strike without warning.
If you are trying to save a few bucks each month and haven’t picked up a builders risk policy, then disaster and ruin on your job site can mean the same for your business.
If you have builders risk coverage, which is also known as course of construction, then Mother Nature can’t touch you.
Because your builders risk will cover the clean-up, debris removal, replacement of materials and supplies, and repair to your project site so you can get back on track.
But when you don’t have this coverage, Mother Nature’s wrath is going to come with a big bill and you will be the one left paying it.
5. Not Knowing the Price of a Toe
Do you know the price of a toe? How about other limbs? Well, it’s time you did. The national average cost of a toe (in workers’ compensation benefits) is over $23,000.
Why should you know this (rather morbid) information?
If you have a single person on your payroll, then you should be ready to take care of them if they are hurt on the job.
Considering the high risks that face every person in the construction industry each time they step foot (or toe) on a jobsite, the chance of someone getting seriously injured is very high.
Workers’ compensation is there to help your employees with their medical bills and lost time in the unfortunate event that they are injured while working for you.
If you don’t have this coverage, then you will have to pay the price of them risking life and (costly) limb to get the job done. And in many states, like California, workers’ comp insurance is mandatory.
Knowing the price of a toe could be the thing that reminds you to add workers’ comp to your construction insurance coverage when you hire your first (or next) employee.
It is easy to avoid the blunders and mistakes that can hit you right in the pocket. Protect your business with the right insurance coverage and you can keep your profits safely where you need them to be.