We insure General Contractors who build homes from the ground up, subcontractors who specialize in a particular trade, and everything in between. Our goal is to ensure you have the appropriate coverages to protect your business, to work with you and your clients to meet contractual obligations as they pertain to the insurance requirements, and to get certificates of insurance out to you as soon as possible so you can focus on your business operations.
In an effort to maintain a strong working knowledge of the insurance coverages available in the construction industry, Kristie English earned the Construction Risk and Insurance Specialist (CRIS) designation, and maintains this certification through ongoing training and education.
Insurance Coverages Relevant to Contractors
Commercial General Liability
This is coverage to protect you and your business assets for claims and lawsuits alleging you have caused damage to another person, entity, or their property.
Commercial Umbrella (Excess Liability)
This provides an additional layer of liability coverage over the top of your underlying liability insurance limit. Be sure to understand if your excess policy goes over the top of just the general liability, or if it also covers excess over the auto insurance.
Commercial Auto & Trailer Insurance
Be sure you insure your vehicles properly when used in your business operations, particularly if you have lettering (your business name and/or logo) on the vehicle, or have the vehicle registered under your business name instead of you individually. If you’re insuring these on a personal auto policy, you may not be properly covered.
Hired & Non-Owned Auto
Consider hired auto if you rent vehicles under your business name while yours is in the shop being repaired, or you need another truck on the road temporarily to assist with additional jobs. Non-owned auto coverage is a good way to protect yourself should one of your employees get into an accident in their own personal vehicle while on the job for you, and their personal auto insurance limits are inadequate or non-existent.
The Non-owned auto insurance coverage would be secondary to your employee’s auto insurance. Of course it’s best practice to maintain documentation of your employees’ current auto insurance coverage, and recommend they carry higher limits than the state minimum.
Tools & Equipment
Depending on the value of your individual pieces of equipment and tools, you may want to schedule some of them. Keep in mind that unless you insure them, your tools and equipment are not going to be covered if, for example, your entire truck is stolen fully loaded with your equipment.
Rented & Leased Equipment
If renting equipment is a rare occasion for you, it might make sense to purchase the short-term insurance from the rental agency. However, if this is a common occurrence for your business, add this coverage so your agent can provide the leasing company with proof of coverage on these occasions.
Office Contents (Business Personal Property)
This is where you would cover tools, equipment, inventory, and any office furniture that remains at this one location. If the equipment is moving from jobsite to jobsite, you need to insure that on an Inland Marine policy (see below).
Inland Marine (Owned Excavators, Bulldozers, & Equipment and Tools in Transit)
The term seems odd to most of us now, but inland marine was originally designed to protect cargo while it was transported along rivers, channels and other waterways that were not on the sea, but were traveling inland. Now it basically means property that is in transit.
Course of Construction / Builders Risk
This is property insurance (liability is not included) to protect the building or home during the course of construction. This covers the building materials and the structure itself, in its various stages of development, up until the certificate of occupancy is issued. This policy can be purchased by the property owner or the contractor.
Workers Compensation / WA Stop Gap / Employers Liability
In Washington State, Workers Compensation insurance is purchased through the Department of Labor & Industries (L&I). WA Stop Gap coverage is an important coverage to carry in WA state to cover the gap that can occur between the work comp policy and the general liability insurance policy. It’s typically very affordable.
Professional Liability (i.e. Construction Consultant)
Employment Practices Liability Insurance (EPLI)
Bonds Relevant to Contractors
These vary from state to state. In Washington, we have three main types of contractor’s license bonds. The purpose of the license bond is to protect the consumer. The state or vendors can make a claim on your bond if you have outstanding bills with them for work comp insurance premium or building materials and supplies, for example.
Specialty Bond $6,000: If you don’t hire subcontractors, and you only do one line of work in your business, this is the appropriate bond for you.
General Contractor’s License Bond $12,000: You need this bond if you hire subcontractors or do more than one type of work in your business (i.e. flooring and drywall work).
Electrical Bond $4,000: This type of bond is specific to the electricians and telecommunications contractors.
Other Common Bond Types for Contractors:
Bid, Payment & Performance Bonds
Employee Dishonesty Bond
Right of Way (ROW) Bonds
Street Obstruction Bonds
Side Sewer Bonds
Certificates of Insurance
Any time you hire a subcontractor to do work on your behalf, it’s imperative you obtain a certificate of insurance from them, with your business name listed as an Additional Insured. Simply having a certificate with your name at the bottom, is not adequate. Remember that your subs must be licensed, bonded, and insured as well. Hiring uninsured individuals without putting them on your payroll as W-2 employees puts you at risk of receiving a fine from the state, and potentially voiding your own general liability insurance policy.
Since I have a General Contractor’s license with the state, that means I can do any type of construction work and be covered, right?
Assuming you’re not working in a trade that requires specific training and licensing such as a plumber or electrician, you may not be violating any state licensing law. Your insurance policy, however, will only defend you against claims arising out of jobs you’ve done that are withing the guidelines of the policy. For example, if you install a new roof without subbing that out to a contractor insured to do roofing, and you have a roofing exclusion as most policies do, you will likely not be covered. Likewise, if you work in a tract development and have a tract home exclusion on your policy, you’re exposed again. This is why it’s important to work with your broker to identify what types of jobs you want to focus on, and to understand which typed of jobs drive the premium, so you can keep your insurance premiums down and not jeopardize your insurance.
We're here to help you understand the best options for protecting your Construction business.
Call us at (833) BIG-TREE / (425) 673-7948, or use our online form to request a quote.