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In today’s business climate, businesses face enormous amounts of risk. The first risk a business owner faces is whether or not to go in to business at all. Next, he or she might face the daunting task of deciding which type of classification is best for their business.
Some additional risks a builder might face is hiring the right employees and determining what activities those employees are allowed to partake in. Even more risk comes when the business starts to have to make payroll for those employees and the business has to find a way to retain those employees. Because of all the risk a business faces, it is more important than ever to have your business properly insured. Here are five coverages builders should secure in order to properly protect their business.
In most states general liability insurance is required by law to be in business. For that reason, it is usually the first type of coverage a business purchases. General liability coverage protects your business from liability claims for property damage and bodily injury to third parties. Third parties may include customers, vendors and anyone else who may come in contact with your business on your premises.
An important aspect of this coverage is that it is not all encompassing. There are limited amounts of coverage a general liability policy will cover. Partnering with an experienced independent insurance agent is the best way to make sure you get the absolute best coverage for your business.
Because of the amount of insurance required for most builders on most projects, professional liability is often an afterthought when purchasing insurance coverage. Just because it is normally an afterthought, does not mean professional liability is any less necessary than all other coverages.
Most professional liability claims made by property owners are against architects and engineers who have been hired for professional services. Because of the subcontracted nature of a lot of the work during the building process, there is a lot of grey area when it comes to professional liability claims. Depending on your state, the laws in that state may recognize contractors as your employees no matter if they are W2 or 1099 workers. It is the responsibility of the business to make sure you know how your contractors are classified and if they have adequate insurance in place. If they do not have proper insurance in place, your business might take on the liability of any claims that occur as a part of the building process. For this reason, it is important to secure a professional liability policy for your business.
All of these gray areas can be navigated with the help of the state department of insurance and by partnering with an experienced independent insurance agent.
Also referred to as “Equipment Coverage,” Inland Marine insurance is coverage for property that is likely to be moved or in transit. For a builder, this includes any tools or specialized equipment that is taken away from the premises and used on a jobsite.
If your construction business is operating away from your business residence, all of your tools are not covered under a basic general liability policy. If you were to severely damage a tractor or some other type of essential equipment, you are responsible for any repairs that might occur if you only have the required general liability policy in place. If you do not have cash on hand to repair or replace whatever piece of equipment you depend on, you need an Inland Marine policy in place to cover the piece of equipment.
If you do decide to purchase this coverage, it is important to keep an accurate inventory of all equipment protected under the policy. That inventory should include detailed pictures. It is equally important to keep this inventory up to date and on file with your insurance agent and carrier. If you buy a piece of equipment during the middle of your insurance term, it is necessary to notify your agent and carrier of the purchase.
Commercial auto liability and physical damage coverage is an insurance policy typically designed to protect your business when travelling both locally and at intermediate distances while using company owned vehicles. A commercial auto policy can be offered to protect both light, medium, and heavy duty vehicles. Also, it can be offered for a single vehicle or for an entire fleet of vehicles.
All of these details are something you should make your insurance agent and carrier aware of. Doing a physical inventory with pictures prior to each policy period is wise. If you purchase vehicles mid-term, it is essential to notify your agent and carrier immediately before use of the vehicle. In most cases the vehicle is not covered under your policy unless they are notified. If you have employees who use their personal or rented vehicles for business purposes, you can get an addition to a commercial auto policy that is called hired and non-owned auto. This policy is designed to cover the liability to third parties for accidents that occur caused by your employees while they are on the job.
In most states and for most businesses, workers’ compensation insurance is required by law in order to be in business. Some states do have exceptions to this rule. Depending upon the structure of your business and the number of employees you have, your state may have an exception to this requirement.
Partnering with an experienced independent insurance agent can help you determine if your business is required to purchase workers compensation coverage. Even if you are not required, it is a good idea to secure this coverage. Workers comp is known as the exclusive remedy when employees are hurt on the job. Employees give up some of their rights to sue their employer in exchange for medical expenses and some lost wages for the time they miss work from an injury that occurs as a part of normal business operations. Employers gain the confidence to know they will not be sued for injuries that occur as a part of normal business operations.Written by Walt Capell