The recent wildfires and subsequent devastation in southern California caused people from all walks of life to check their insurance policies and assess just how well they could withstand catastrophe. One industry that is uniquely exposed to myriad personal, weather, and performance risks is construction. With so many moving parts, it is crucial to guarantee coverage against any and all eventualities. Keep reading as we explore the importance of proper insurance coverage for construction and roofing businesses.
Protects Against Liability
Shielding yourself from liability is one of the primary roles of any type of insurance. It is underscored in the construction sector, where contractors will be in direct contact with high-value property of others.
Accidents do happen on the job, even with the utmost care. When retrofitting architectural louvers, it is possible to inadvertently damage the existing wall. When performing a roofing upgrade, some damage to the substrate may occur.
There are numerous types of insurance that will limit your liability as a building professional. Professional liability insurance will help insulate you from claims of faulty or negligent workmanship. Builder’s risk insurance covers damage to the building under construction. General liability insurance will protect third-party claims for property damage or injury.
Limits Financial Loss
Although there is a cost associated with paying insurance premiums, these costs pale in comparison to the debilitating financial losses that could forestall operations in the event of an incident.
Each of the liability insurances will provide the firm financial protection, as the insurer will pay the costs of making the claimant whole. In addition, it is also important to protect against construction theft and vandalism. Data from 2024 indicates that construction theft may be up to a $1 billion industry, so be sure to take out a contractor’s equipment policy to guarantee that all tools, materials, and machinery are covered against criminal loss.
May Be a Matter of Law
In many cases, construction insurance is NOT required by law. It may only be required for specific types of projects or in certain jurisdictions, but it is not a universal requirement for all construction and roofing professionals. The exceptions are commercial auto insurance and worker’s compensation (in some states and for firms with a baseline number of employees).
What is a matter of law is compliance with local building codes and municipal ordinances. It is likely that laws exist even when performing non-structurally-altering projects, so check deck building codes when performing any type of exterior project, no matter how small in scope. As the sign says: “Call before you dig.”
You may also hear phrases such as “licensed and bonded” when it comes to construction work. Like construction insurance, the legal obligation to be licensed and bonded (surety bonds) varies based on the location and scope of the project.
Licensing simply means that a contractor has received a permit from a state or local government to perform a specific type of work in that jurisdiction. It serves as a proof of competency. In some cases, the governing authority will require construction insurance in order for a contractor to maintain a valid license.
Surety bonds work similarly to insurance in the realm of financial protection, but with important distinctions. Surety bonds serve to guarantee that a contracted project is completed as agreed upon, whereas insurance is protection against unforeseen future events.
Always be proactive about checking local laws to ensure that you have adequate coverage. Remember that insurance, licensing, and bonds are not mutually exclusive and should be used in conjunction as part of a comprehensive protection plan for a construction firm.
Establishes Trust
Proof of top-notch construction insurance will go a long way toward establishing trust with clients. Just as it is hard to trust a motorist using the most cut-rate auto insurance as required by law, so too will it be difficult to hand over the reins of a multi-million dollar construction project to a firm that scrimps on protection. If a company is cutting all corners with their insurance, are they also trying to squeeze by with the lowest-rated OSHA scaffold planks? Are they sourcing the best materials to ensure the quality and longevity of the project?
For this reason, many types of projects, such as large-scale government and corporate projects, will not partner with firms that do not have an adequate level of insurance coverage. So while you may be able to legally eek by with minimal coverage, it will greatly limit your client base and ability to win the most lucrative bids.
Leave No Stone Unturned: Procure Comprehensive Insurance Coverage for Your Construction Business
For better or for worse, there is a lot that can go wrong on a construction site. Therefore, it is crucial that your firm has comprehensive coverage to help you sleep easier in the face of the unknown. To get started on building an airtight construction policy, contact the Barber Insurance Agency for a consultation today!
Author Bio:
Roger Marx is a freelance writer that loves sharing his knowledge and expertise on the latest trending building and design products. He lives in Minneapolis, Minnesota where he enjoys spending time with his wife and working on backyard projects in his spare time. Roger’s work as a freelance writer can be found on Building Product Advisor, a construction industry resource site