If you work in the construction industry, there are certain insurance policies you must carry to protect yourself. The two forms of coverage you need to be financially protected in a building you’re working on or if your construction materials are damaged during construction are builders risk insurance and construction general liability insurance. You can purchase these policies for varying time frames, and coverage ends when the project is complete.
Contrary to popular belief, these two policies are not interchangeable. For a construction project, in order to have all of your potential exposures covered you will need to have both policies. But what’s the difference?
Builders Risk Insurance
Builders risk covers the contractor’s materials, equipment and property related to the building being constructed. This insurance protects the contractor’s interest in the equipment, the value of the property and the materials while they are being used in the construction. The coverage will continue until the project is completed and signed off on by the owner.
This policy also protects against risk such as theft, earthquake, government action, weather or water damage or mechanical breakdown. Extended coverage is offered to protect temporary structures such as scaffolding, cover for debris removal costs, or charges made by the fire department service.
Builders risk insurance covers damages resulting from:
- Fire or explosion
- Lightning strikes
- External theft
- Vehicles or aircraft crashing into the structure
Coverage is excluded if damage is caused by:
- Water damage including flooding
- Weather-related damage to property left unprotected in the open
- Government activities
- Mechanical breakdowns
- Faulty design, planning, materials, or workmanship
- Contractual penalties or voluntary partings
Also, note that most builders risk insurance policies will not cover tools or equipment, liability, workplace accidents or property belonging to anyone besides the specific insured.
Contractors General Liability Insurance
Contractors general liability insurance will cover risks regarding bodily injuries or property damage. It does not cover the contractor’s property or equipment (that’s for your builders risk policy).
The policy is designed for a contractor’s specific liability coverage needs and protects against possible accidents and the liability that may arise from these. For damage coverage, the policy may protect against fire, explosion, underground work or collapse that is connected with the insured’s project.
Construction general liability insurance is essential to anyone in the construction industry. It will protect you if you are accused of causing injury or property damage, as well as negligence. Defending yourself against lawsuits is very expensive. General liability assists with legal fees to keep your business in operation and avoid financial devastation.
A general liability insurance policy typically will cover you if any of the following occur:
- Someone is injured on your property
- You are renting commercial space that becomes damaged
- You or your employees cause injury or property damage
- You are sued for false advertising, libel, slander or copyright infringement
- Errors and omissions
- Lawsuits that involve something other than bodily injury, property damage, personal injury and false advertising.
Both of these policies are highly beneficial for those in the field of construction. Seeking construction general liability insurance should be your first step, but never forego a builders risk policy.
About Tri-State Insurance Agency
At Tri-State Insurance Agency, we want to ensure your high-net-worth homes are protected during the holidays and year-round. Our homeowners’ insurance policies are designed specifically to protect affluent homes like yours. To learn more about our coverage options, contact our specialists today at (973) 579-6776.