Not many people wake up in the morning wanting to talk about insurance. But it’s important for contractors to take a keen and ongoing interest in their company’s coverage. It needs to meet not only the bid requirements of every project you take on, but also the wider needs of your construction business as it grows and evolves. Let’s look at some important aspects of insurance that warrant regular re-evaluation.
Be prepared for adjustments
As you’ve probably noticed, many projects require endorsements to your policies — instances where an expansion of your coverage is needed, such as adding a new project site or new drivers for your vehicles. These endorsements aren’t unusual; they’ll continue to come up during the normal course of business. So, be sure to maintain constant communication with your agent to ensure you’re properly covered on every job.
Also review your policy’s exclusions. You don’t want to learn too late that something you’d thought was covered isn’t. Should a claim arise, it will be better if you have paid the cost of covering items that are typically excluded. For example, your standard policies won’t likely cover you in the event of a mishap involving hazardous materials. So, if you regularly deal with those substances, consider obtaining additional coverage before a problem occurs.
Review your vehicles
This area deserves a special mention because of the vast differences from company to company. When setting up or reviewing vehicle coverage, consider how your employees use your vehicles and be sure your insurance covers all potential situations. Ask yourself some key questions.
For example, do your salespeople or estimators have cars that they drive home and keep overnight or on weekends? Have you moved on to larger projects that now require you to operate cranes or other large equipment on your jobsites? Jobsite security can affect insurance coverage and costs, too. Are your vehicles protected by sound, documented measures?
In addition to maintaining proper coverage, do you screen the driving records of employees who use your vehicles? Sometimes, you can save yourself from big headaches by keeping poor drivers from getting behind the wheels of your vehicles.
In recent years, clusters of hurricanes and widespread wildfires have served as cruel reminders of the importance of disaster recovery planning and the often-unavoidable necessity of policy riders.
For instance, many construction companies operating in Florida or near the Gulf Coast have seen marked increases in the wind coverage portion of their builder’s risk insurance. This originally occurred because Hurricane Katrina wiped out many jobsites covered by these policies. Since then, many insurers exclude or severely limit wind damage from their basic plans, meaning that a specific rider is likely needed for such coverage.
Even if you don’t work in a region typically afflicted by natural disasters, familiarizing yourself with your builder’s risk policy is essential. Generally, most construction businesses have this coverage for their projects.
But many contractors may forget to check the job documents to see who’s responsible for the deductible. And considering the ever-present possibility that insurance costs have gone up, you absolutely need to know whether you’re on the hook for that deductible so you don’t get stuck with an unanticipated cost.
If your company has a significant amount of assets, or if an additional layer of protection would help you sleep at night, an additional coverage to consider is an umbrella policy. These protect your company against losses greater than your other coverage. Typically, umbrella policies are separate from your standard package and often provided by a different carrier.
Granted, there are more exciting developments going on in the construction industry today than insurance. But there’s no getting around the general importance of risk management and the specific necessity of having the right safeguards in place with which to protect your company. And don’t sell your insurer short — it may have some new products that spark your interest, after all.