The construction industry today is incredibly fast paced. When it comes to protecting the business, management 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. Lengthy paperwork and processing time in many cases mean 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
Business leaders must not only work to protect employees, but also the business’s assets if an accident occurs. 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 is 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 benefit 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 allowing employees to use personal vehicles for any 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.
Workers’ Compensation
Workers’ compensation insurance is a mandatory policy, generally purchased outside of a BOP. However, it is important to mention it while discussing business coverage because of the high physical risk of the construction industry.
Workers’ compensation insurance is invaluable to the employee and employer, as it provides financial protection in the event of a job-related accident. This safety net is crucial. Without it, the impact of a serious accident could be disastrous.
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.
