That statement may be obvious, but it bears repeating. The most obvious reason for insurance in the construction business is liability for injuries, property damage or accidents. Your line of work is a dangerous one, and accidents are often the cost of doing business. You do what you can to prevent accidents and keep your workers and others safe, but there are no guarantees.
However, your insurance needs require more than just covering injury claims. You may need several types of insurance to conduct your business, and special insurance, depending on the project. In fact, you may not even be eligible to bid on a project unless you already have certain policies in place.
Construction project insurance policies
You will more than likely need one or more of the following insurance products during the course of your business:
- A property owner may require you to have a performance bond, which protects the owner if you fail to deliver or perform under the terms of the contract.
- Your builder’s risk insurance should provide coverage equal to the value of the completed project minus the value of the land.
- A payment bond ensures that laborers, material providers and subcontractors will receive payment as agreed, but these are not ordinarily a requirement.
- A property owner may require you to have professional liability insurance in case you do something negligent or make errors that jeopardize the project.
- A hold harmless agreement protects you from companies or contractors that aren’t part of your contract.
The more coverage you have, the better off you will be should something go wrong. Disputes arise in construction all the time, and the better you plan for them, the more likely it is that you will get through them as unscathed as possible. In order for your business to succeed, you need to protect it. Having the appropriate insurance will help do that.
There is another way to protect your business
Another way you can help resolve any disputes that arise during a construction project is to work with an experienced construction law attorney. It may be possible to avoid protracted litigation in many cases, but without a full understanding of your options, you may go the wrong direction and end up inadvertently costing your company. After reviewing the circumstances and exploring all of the available legal options, you can determine the best way forward.