Are you in the construction business? If so, you will need the proper type of business insurance coverage to protect yourself and your business. You will probably need both builders risk insurance as well as contractors insurance. These two forms of coverage combine to adequately protect you against certain losses. Let’s go over what each one is and what they entail.

What is Builders Risk Insurance?

Builders risk insurance covers a contractor’s equipment, materials, and property as it pertains to the construction of a building. Coverage will continue until the project has been completed and the owner signs off on the work. It provides protection against many risks, including:

  • Vandalism

  • Theft

  • Mechanical breakdown

  • Weather

  • Earthquakes

  • Water damage

  • Government action

Coverage under this type of insurance policy can be extended to protect scaffolding and other temporary structures, as well as the costs of debris removal or charges brought by the fire department.

What is Contractors Insurance?

Contractors general liability insurance is a must for anyone in the construction industry, providing protection from liability for property damage or bodily injuries. It does not cover the contractor’s own property or equipment. It does protect you in the event of an accident and any liability that could arise. This includes legal fees required to defend yourself in court, if need be. Contractors insurance can kick in if:

  • You or your employees cause injury or property damage to others

  • Someone has been injured on your property

  • You are renting a commercial space that suffers damage

  • You are sued for libel, slander, false advertising or copyright infringement

Which Policy Covers What?

General contractors, developers, and property owners purchase contractors general liability insurance to get protected for their building materials, equipment and structures while they are in the process of being built. You may have to carry this coverage to safeguard you, as general contractors may be held liable for work their subcontractors are performing. 

In order for your contractors insurance to apply to damage caused to your construction project, the incident has to have occurred at a covered location (i.e., the jobsite) and you must be legally liable for damages.

In general, builders risk insurance covers damage related to external events that are unrelated to the construction work. That being said, policies vary by company. Some all-risk builders policies cover many loss events, and that may actually include coverage for property damage that occurs during the course of construction. There is definitely a gray area between these two coverage types, so be sure to talk with your insurance agent about this in depth. 

As you know, possessing the right insurance coverage is a critical part of doing business in the construction industry. You must protect yourself in the event something goes wrong during your project. 

Contact Bearce Insurance with Your Construction Insurance Questions

If you need assistance choosing between builders risk and contractors coverage, please don’t hesitate to contact us in Brockton at 508-586-3400.