An Overview of Construction Insurance

Association of Construction and Development
June 14, 2012 — 1,758 views  

There are many cogs in the construction process. Building something from nothing requires time, materials and many skilled professionals. As a result, it behooves a construction company to protect itself and the people it employs. Basic construction insurance can provide the business with a certain level of safety.


Therefore, it is important for a builder to know the ins and outs of his or her policy to prevent potential harm from befalling anyone. According to Querrey and Harrow, construction contracts commonly include multiple insurance provisions such as builder’s risk insurance, workers’ compensation, liability insurance, employer’s liability insurance and automobile liability policies.


Here are three prominent inclusions to construction insurance:

1. Builder’s risk insurance. This portion of construction insurance covers the contractor’s interests before the project is completed. For example, the policies cover the job site from damages, including wind, fire or theft. The intent of the insurance is to protect the intended party from any accidental or sudden event. It can be used to cover an entire construction site or specific projects such as a remodeling job. However, it is important to remember this insurance does not protect the individual from any damages caused by poor construction, according to Insurance Policies Online.

2. Liability insurance. Builders and contractors can employ a great number of people on a construction site. Liability insurance protects builders and contractors from third party claims such as thefts, damages or injuries. Similar to builder’s insurance, this policy will rarely include the problems that arise from poor construction. In general, contractors and builders will each have their own commercial general liability policy.

3. Automobile insurance. A commercial auto insurance policy is often required when a business claims a vehicle is used for professional purposes. The appropriate registration title and the corporate ownership of the automobile may be needed to gain full and complete coverage. Acting much like a personal auto insurance policy, injuries, materials and the vehicle itself are often included. 

A construction insurance policy offers a business owner peace of mind and somewhere to turn to when a sudden and unexpected complication arises. These policies protect an individual from losses resulting from potential risks.

Association of Construction and Development