Construction projects and insurance needs can vary greatly from job to job. To build the right contractor insurance policy for construction work, pick from several coverage types to address potential problems.
A common way to get contractors insurance is with a business owners policy (BOP). This typically includes business general liability insurance, business interruption insurance, business property insurance and customizable coverages.
Basic contractor insurance coverage types
Business liability insurance – General liability insurance for contractors covers injury and property damage lawsuits. For example, someone might claim they tripped and injured themselves at a job site and you're responsible.
Business interruption insurance – If a problem covered by the policy, such as hail, fire or vandalism, caused you to temporarily relocate or close, this covers extra expenses. It also replaces lost income. This coverage is also called business income insurance.
Commercial property insurance – This covers your building and your property inside. It also typically covers signs and outdoor fences. Property can include tools, computers and office furniture. If you run a contracting business out of your home, you might consider an in-home business endorsement through your home insurance policy. However, note that these endorsements typically have lower coverage limits than a business policy.
Additional contractor insurance coverage types
Commercial auto insurance
This covers vehicles used for business, like pickups and dump trucks. A personal auto policy typically won't cover work vehicles.
Contractors tools and equipment insurance
This typically covers tools and heavy equipment from problems such as theft, vandalism and physical damage (other than normal wear and tear). You might consider this coverage if you're using equipment like backhoes, excavators, forklifts and tractors.
Equipment breakdown insurance
Your contracting business probably relies on key pieces of equipment, such as power saws and generators. This covers the cost to repair or replace broken equipment. It can also cover lost income if broken equipment causes business interruption.
Hired and non-owned auto insurance
This covers vehicles that you use, rent or borrow. For example, if you rely on an employee-owned truck to transport building materials to a job site. This covers injuries and property damage for auto accidents in vehicles you don't own.
Inland marine insurance
This covers tools and equipment while in transit to a job site. You could also consider adding an installation floater, which covers material from the time it leaves your business to the time it's used or installed at a job site.
Workers compensation insurance
If employees get hurt or become ill while working, this covers medical bills and replaces some lost income with disability insurance.