The commercial construction industry has seen many advances in operating safe jobsites. New technology, safer equipment and updated training methods have made working on construction sites safer than ever before. Yet, despite these efforts and safety measures, construction workers still represented 20% of all workplace deaths in the U.S. in 2019 alone.
The nature of the construction industry includes inherent risks. Safety measures, training and technology can always be improved to mitigate these risks, but accidents can and likely will still happen.
The best way construction businesses can prepare for these unforeseen circumstances is by having adequate insurance plans in place. Proper construction insurance is essential for contractors and workers alike.
A basic insurance policy covers the person or entity that purchased the policy. With construction insurance, that same policy should also protect the company that hired the person or entity. The subcontractor provides insurance to protect itself, but when it adds the general contractor’s name to the coverage, the coverage extends beyond the primary policyholder to protect the general contractor from liability.
When the general contractor is named on the construction insurance policy, the liability can’t be passed onto the general contractor from the subcontractor. So, the risk is mitigated. If the policy is inactive or doesn’t include the proper verbiage, however, then the construction liability lands on the general contractor, which now finds itself legally and financially responsible for accidents on the jobsite.
When it comes to understanding construction insurance and construction liability, it helps to think of it as structured the same way as a construction site. If the foundation of a project isn’t set up properly and it fails, everything above it pays the price and comes crashing to the ground. If a subcontractor or vendor has current insurance that’s valid and in place on a project when an accident involving the subcontractor occurs, the contractor pays the price by having its insurance cover the costs associated with that accident.
Equally important to maintaining a valid and active policy is choosing the right types of construction insurance. The most important types of construction insurance for contractors or construction companies include the following:
Getting and maintaining the proper construction insurance coverage and construction liability protections has always been challenging for contractors and business owners. However, the challenges are often self-imposed: Most companies concentrate on the immediate needs of each specific task to keep forward progress on projects, forgetting that insurance is part of that progress.
By taking the following four actions, construction businesses can provide safety and support to their workers—and stop relying on hope as the only strategy for risk management:
Construction insurance is critical to running a safe and productive construction business. By understanding existing policies and their importance to workflows and safety, contractors and workers can stay safe while on the job. Additionally, renewing early and automating systems can remove the barriers to better, more effective construction insurance practices.
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