Best Liability Insurance Advice for Contractors

March 3, 2024

As construction industry trends quickly shift, protecting your business against unexpected events is paramount to its survival and reputation. Contractors face numerous risks related to property and bodily injuries which could threaten financial security or reputation; construction liability insurance provides essential coverage against such liabilities. Here are some of the Best Liability Insurance Advice for Contractors!

Why Is Liability Insurance Essential for Contractors? 

Imagine this: One of your clients falls and sustains injuries on your worksite, or something goes wrong during installation that causes property damage due to fire; this situation would likely incur substantial financial repercussions in terms of medical bills, legal fees, and repair costs - the burden being carried could easily surpass that covered by construction liability insurance! Construction liability policies act as safeguards by covering these potential financial impacts by covering costs associated with:

  • Bodily Injury Coverage: On-premise injury cover insurance works for businesses when people like customers, employees, and even the general public suffer injuries in the establishment.
  • Property damage coverage: Home insurance against personal property damage covers you from financial losses due to a mishap that might result in damage to another person's house or any nearby structures that could be the property of your clients and customers.
  • Product and completed operations liability: This policy extends coverage against claims alleging defective work or products sold after project completion, even for defects that arise post-project completion.

Operating Without Liability Insurance Coverage

Operating without construction liability coverage exposes your construction business to numerous risks, such as:

  • Financial Difficulties: Lawsuits can be expensive affairs that threaten financial ruin if not adequately protected against. Just the cost of defending one can be substantial enough; even when ultimately found not liable the expenses incurred could still add up significantly.
  • Business Closure: An expensive legal judgment or settlement may compel you to close down, endangering both yourself and the jobs of your employees.
  • Damaged Reputation: The media attention in the cases of accidents or lawsuits can easily hurt a business's picture and thus the process of attracting new clients, while simultaneously retaining each of the business relationships becomes very hard.

Finding the Right Liability Insurance Plan

Selecting an adequate construction liability policy requires careful consideration of several key aspects:

  • Your Size and Scope of Business: When setting policy limits for larger projects, take into consideration their risk exposure levels as this should influence coverage limits accordingly. Larger ventures usually call for larger coverage limits.
  • Project types you undertake: Different project types involve various degrees of risk. Tailor your coverage accordingly to accommodate all risks associated with residential construction, commercial construction, or renovation works in which you specialize.
  • Contractual Requirements: Depending on your client, certain companies require that you carry specific liability coverage as part of being awarded contracts.

Additionally, consider additional coverage such as Builder's Risk (COC) Insurance to protect against unexpected events during construction.

Construction Liability Insurance: Policies and Exemptions

Third-Party Bodily Injury Coverage

The provision of safety is imperative for the business to ensure its clients and sub-contractors are safe on the worksite. Examples may include delivery drivers tripping over debris or passersby getting hurt due to falling materials on site. This policy protects you against claims brought forth against the non-employee population arising out of injuries sustained on that premises by outside sources that are unrelated to employees on that work site.

Third-Party Property Damage Coverage

With Third-Party Property Damage Insurance coverage in your pocket, financial losses caused by accidental property damage caused to other people - like neighboring buildings, client properties, and public infrastructure - such as accidentally hitting underground utilities while digging or creating water damage at client residences due to incorrect plumbing installations can be prevented from becoming financial losses for you and others.

Product and Completed Operations Coverage

When claims arise due to defects in your work or products you sell after project completion, such as structural failure due to poor construction practices or product malfunction causing property damage or personal injuries, this coverage kicks in automatically. 

Read more: Construction and Realty Insurance in Canada!

Important Exclusions

Construction liability insurance provides ample protection, yet it's essential to understand exactly what does not fall under its purview:

  • Intentional acts: Any damages or injuries due to intentional acts of negligence or misconduct will not be covered under an insurance policy.
  • Pollution and hazardous waste disposal: Damages related to environmental pollution or disposal typically fall outside the coverage of workers' compensation insurance, while injuries arising at work typically are covered as well as illnesses related to employees' work environments.
  • Contractual liabilities: Certain contractual responsibilities beyond standard liability coverage might require additional endorsements or separate policies to meet.

Understanding Policy Limits and Deductibles

Deductibles refer to the maximum amount your insurer will cover when making claims under covered policies, so selecting policy limits that meet any potential risks associated with projects effectively is of equal importance ensuring enough protection is provided from possible hazards that arise during these projects.

Working with an established insurance broker will make the selection of an adequate deductible easier and reduce hassle during its implementation process. Partnership with SummitCover offers several advantages: 

  • Expertise and guidance: Our team of insurance specialists possesses deep industry knowledge that allows them to guide you with the best liability insurance advice for contractors.
  • Competitive quotes: Leveraging our relationships with premier insurance carriers, we secure competitive quotes at comprehensive coverage options at highly affordable rates for your business.
  • Assuring ongoing support: At our insurance provider, we're dedicated to offering ongoing advice and risk management guidance, making sure you have everything necessary for effective risk mitigation.

SummitCover: Your Trusted Partner in Construction Liability Insurance

At SummitCover, we understand the unique challenges contractors in the construction industry face and offer the Best Liability Insurance Advice for Contractors to their specific business needs. Our experienced insurance team offers expert guidance in selecting coverages to protect against financial losses or legal ramifications to provide maximum coverage protection against financial or legal liability claims against their business.

Reach out to SummitCover to arrange a meeting and get the quote for construction liability insurance! We are focused on bringing customers a sense of comfort so they can concentrate on their business endeavors!

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