A construction insurance policy is a form of insurance that covers a structure during the construction phase. It's commonly issued to contractors who are working on a project, and it covers any risks that they are likely to face while completing the project. For example, contractors may have a structure damaged by fire, or workers on the site may get injured while on the job.
Because there is a lot of activity that occurs on a construction site, it's important for contractors to have coverage against the many risks they are likely to face on a daily basis. That is why construction insurance comes in handy. To identify a policy that works for you, make sure it includes the elements and coverage options that protect you from risks.
A comprehensive construction insurance policy will include the following key elements.
Liability coverage (against 3rd party damage)
Liability coverage is perhaps the most important part of construction insurance. It protects you from any damages you're likely to cause to either the project owner or another third party while working on the project.
Damages can occur in the form of accidents on the site or the negligence of employees while working. Regardless of the cause of 3rd party damage, liability insurance protects you from costly lawsuits and financial liability.
Construction insurance also plays an important role in protecting your employees while on the job. If a worker becomes ill or injured due to the work they are doing, a worker's compensation policy will cover the medical costs of the employee as well as reimburse them for any lost wages.
Claims from workers who are injured on site can be quite costly, so it is important to have worker's compensation coverage as part of your insurance plan.
Coverage for loss of income
In some cases, a complication can arise during a construction project that leads to the delay or stopping of the project for some time. This can be caused by inclement weather, an accident that occurred on site or complications with the project contract.
Whatever the reason, a loss of income coverage in your construction insurance policy can ensure that you're compensated for the losses you incur when a project is delayed. The loss of income coverage will consider how much you have lost (and reimburse you) for the duration of the delay.
If you have vehicles or machines that are used during the construction project, you can also have those insured under your policy. Machines can be quite costly to fix when they are damaged on site, and coverage for vehicle repairs can save you a lot of money.