General contractors have to juggle countless tasks. From initial land preparation to the final finishes, general contractors are in charge of every step in the construction or renovation of a building.
There are also other types of contractors that general contractors may work with during construction. Paper contractors are typically firms whose employees act as prime contractors in charge of coordinating tasks like masonry or framing. Subcontractors are typically hired by the general contractor to complete specialized tasks like electrical or plumbing.
Managing these different elements requires very specific insurance coverages. Let’s break down some key insurance considerations for general contractors.
Property exposures. This is usually limited to the general contractor’s office operation and vehicles, equipment, and storage. If the general contractor works on masonry or framing, then bricks or lumber are likely stored on site which increases the risk of exposure to more elements like theft, fire, or vandalism.
Surety bond exposures. Many projects have financial guarantees for completion and payment of supplies and labor. Some contractors may not be able to qualify for these bonds because of prior issues.
Inland marine exposures. Contractors’ equipment, goods in transit, builders’ risk, papers and records, and accounts receivable are included. While many subcontractors typically use their own equipment, a general contractor may lease larger machines like cranes which are subject to agreements with the firms they’re rented from. If the general contractor performs any of these tasks on site, then the equipment may face risks from drops, falls, collisions, or water.
Contractual liability exposures. Contractual language is a significant priority for general contractors. Successful projects depend on well-managed contracts. For instance, if a general contractor fails to properly verify a subcontractor’s insurance certificates or fails to ensure that the project owner and general contractor are included as additional insureds on the subcontractor’s policy, significant financial loss or expensive litigation can result.
Premises liability exposures. These exposures are usually limited because there isn’t typically public access to the construction site. However, the general contractor is responsible for any damage or injuries resulting from operations on site. Lack of communication between contractor and subcontractors, heavy machinery causing damage, welding operations which carry risk of burns or fire, falling tools, or unsecured ladders or cranes are all examples of possible hazards on the premises.
Workers compensation exposures. These types of exposure vary greatly because of the scale or nature of a job. Exposures are reviewed based on the type of work construction being done. The general contractor is responsible for the jobsite and may be held responsible for any injuries to subcontractors working on site.
Completed operations exposures. Quality control is a key component to any successful construction project. Failure to adhere to the plans, use quality materials, or maintain full compliance with the project specifications may lead to serious financial loss.
Minimum recommended coverage:
Business Personal Property, Builders’ Risk, Employee Dishonesty, General Liability, Employee Benefits Liability, Surety Bonds, Umbrella Liability, Automobile Liability and Physical Damage, Workers Compensation, Hired and Nonownership Auto Liability
Further coverages to consider:
Building, Accounts Receivable, Business Income with Extra Expense, Computers, Contractors’ Equipment, Installation Floater, Tool Floater, Goods in Transit, Valuable Papers and Records, Environmental Impairment Liability, Employment Related Practices Liability, Stop Gap Liability
Do you need to insure your construction site? ERM Insurance Brokers in Irvine, California can help!
Call (949) 222-0444 to speak with an expert.