Construction professionals take on a lot of risk associated with construction projects. That risk is often rewarded, but there is also a potential for loss. That’s where insurance comes in. Choosing the insurance your business needs can be difficult and not everything is covered by even the best insurance policy. Understanding some of the most popular kinds of coverage can help you figure out what you need.
In part one of this two-part article, a Chattanooga contractor attorney discusses types of insurance to limit the liability of contractors.
General Liability Coverage
Also referred to as commercial general liability, this is the most popular type of construction insurance. Bodily injury, property damage, and legal costs for lawsuits concerning the business are covered in this policy. General liability coverage creates a foundation for coverage. Other policies can be added to supplement coverage for your specific needs.
This type of insurance does not cover the cost to repair defective work, but it does cover damage caused by the defective work. An example could be a wall placed incorrectly according to the design plans. It would not cause collateral damage to the property, so the contractor would have to pay to have it fixed.
Professional Liability Coverage
Professional liability coverage, also called errors and omissions insurance, is growing in popularity with contractors. More contractors are performing combined design and building work and coverage for errors and omissions is not provided under general liability, so contractors involved in design work often add this to their coverage.
Builder’s risk policies cover the structure, materials, and the builder. Coverage of events varies; however, fire, vandalism, hail, wind, lightning, and theft are often covered. There are exclusions to the types of damages covered, such as internal theft, earthquakes, floods, and government action.
Read part two to learn about some types of insurance that you may not have thought of for your construction business.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.