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When it comes to protecting today’s construction businesses, executives must make sure necessary insurance coverage is in place and communicated to clients or other required parties—a responsibility that should not take any longer than necessary. In many cases, lengthy paperwork and processing time leads to lost productivity and profit. 

Studying small businesses from a variety of industries, global consulting firm McKinsey & Company found that 40 percent are uninsured or underinsured, leaving them at risk of paying out of pocket for massive damages in the event of a loss. Not having the right coverage to match specific business needs exposes the organization to additional risk. 

Each business insurance policy should be as unique as the company. A good option for small- to mid-size businesses, including contractors, is a business owner’s policy (BOP). A BOP is general liability and property coverage wrapped into a single policy. The policy can be customized through endorsements, making it unique to the company’s specific risks and current needs. A comprehensive BOP for a construction company should include the following.

General Liability

If an accident occurs, business leaders must not only work to protect its employees, but also its assets. General liability coverage is typically required by client contracts, which makes it an excellent base coverage in a BOP. General liability and personal injury coverage provides for medical expenses if a person is injured and repairs if any property damage occurs in the work area.

Tools and Equipment Coverage

The tools and equipment it takes to do construction work require a substantial investment. Adding tools and equipment coverage to a BOP protects that investment. This endorsement insures the business’s property, tools and equipment while at a jobsite or in transit—and even if temporarily in storage.

Data Compromise

Data compromise coverage should be considered by any organization that processes customer information digitally or stores it in any way. This endorsement covers expenses required to respond to the loss, theft or accidental release of personal information. That could include forensic IT review, legal review and notifying anyone potentially affected. 

It also provides defense liability for lawsuits and damages resulting from a breach, reimbursing the business for defense and settlement costs if someone whose personal information was compromised files a lawsuit against the company.

Employee-related Practices Liability

The employee-related practices liability endorsement protects the business in case of a claim or lawsuit related to inappropriate workplace behavior. Examples of this include wrongful termination, harassment or discrimination.

Employee Benefits Liability

Failing to properly manage benefits programs can result in loss of coverage for some or all employees. The employee benefits liability endorsement covers an employer if an error occurs in the management of benefits, such as group life insurance, group health insurance, profit-sharing plans, employee stock plans, workers’ compensation or unemployment insurance.

Non-owned Auto Coverage

Contractors that allow employees to use personal vehicles for work- related activities should make sure to have non-owned auto coverage. In most cases, personal auto policies don’t cover damages incurred when a vehicle is driven for business. Adding this endorsement to a BOP provides liability protection when an employee uses a vehicle for business purposes that is not owned, leased, rented or borrowed by the business.

Regular Review

Just as a construction company changes over time, its insurance policies must adapt as well. Risks fluctuate based on types of contracts, number of employees, owned assets and more, so a set-it-and-forget-it mindset about insurance is problematic. 

To avoid gambling with the future of the organization, business leaders should routinely review their insurance policies to ensure current risks are covered. An experienced insurance provider can walk an owner through the options and build a customized BOP to meet their unique needs. 

Further, with today’s technology, business leaders can answer a few dozen questions online and receive a customized coverage plan and quote in minutes. Running a business can be complicated; business insurance should be simple. 


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