Types And Benefits Of Construction Insurance | JGS Insurance 

Types And Benefits Of Construction Insurance

Types and Benefits of Construction Insurance

If you build it, they will come—but so will pricey liabilities if you forgo the necessary protections. Although an industry of innovation, growth, and creation, the things that can go wrong on a construction site have the potential to be detrimental to your business. While you cannot completely prepare for the unfathomable, a comprehensive risk management program can help mitigate exorbitant costs in many scenarios in the volatile construction industry. There are many different policies and coverages out there in the world of construction insurance: we’ll go over the eight most common.

What is construction insurance? Construction insurance is an umbrella term for a variety of insurance policies that protect construction companies and contractors from lawsuits, loss, and other expensive undertakings.

Start broad and narrow down.

This is the coverage where most construction firms and contractors start.

General liability insurance is a broad policy that covers costs of common construction-related risks, such as:

  • Third party bodily injury or property damage
  • Copyright infringement
  • Advertising injuries
  • Damages resulting from completed construction projects or installations

From conception to completion, it is impossible to prepare for all the potential hazards that go into a construction job. Because construction is a high-risk industry for injury and damage, this is an essential coverage for your business. In many cases, clients require your firm to have general liability insurance before starting a project with them.

What costs are covered under a general liability insurance policy?

Your policy should cover the costs of:

  • Lawsuits, legal fees, settlements, and judgements
  • Property repair and replacement
  • Medical bills


Safety is paramount for your business, your employees, and yourself.

Nearly all states require construction companies and contractors to have worker’s compensation insurance. This type of policy covers an employee’s medical bills and lost wages for an injury or illness sustained on the job. Worker’s compensation insurance also helps safeguard your company from costly lawsuit resulting from job-related injury or illness.


Keep the wheels of success spinning.

Company vehicles get your workers and equipment where they need to go. But this responsibility comes with the potential for expensive risk. Commercial auto insurance is designed to cover costs associated with the fallout of an accident in a company vehicle, including:

  • Medical bills for all parties injured
  • Legal fees
  • Property damage

Most construction firms and contractors are required by law to have commercial auto insurance, but the level of coverage varies.


It’s hard to get work done on time when everything is broken.

Contractor’s tools and equipment insurance is incredibly beneficial in mitigating costs associated with replacing or repairing tools that are lost, stolen, or damaged.

What does this policy usually cover? Contractor’s tools and equipment insurance is designed to cover the costs of low to moderately priced devices less than 5 years old, such as:

  • Power drills
  • Nail guns
  • Saws
  • Wrenches
  • Hammers

This type of policy usually has a low limit of $10,000. To cover more expensive equipment, such as forklifts and excavators, consider inland marine insurance.


Off the boat and across the land—make sure it arrives safely.

These two words appear to be polar opposites, and strictly speaking—they are, but inland marine insurance refers to the transfer of your goods once they leave the ship.  Say your bulldozer survives the stormy seas on a cargo ship and makes it to port, the bulldozer is then loaded onto a trailer and put enroute to your jobsite. But along the way it falls off the truck after going over an uneven patch of road. An inland marine policy would cover the cost of replacement so you can get back on track as quickly and as little out of pocket cost as possible.


Keep your footprint (and your liability) to a minimum.

That equipment you worked so hard to get needs to be refueled every now and then. Sometimes the easiest and least time-consuming way to accomplish this is to bring fueling tanks onto the jobsite. Pollution liability insurance is designed for these exact situations. Any time fuel or chemicals are brought on site, a potential pollution risk lurks in the shadows. Protect your business from hefty injury claims and environmental fees.


Your project requires a lot of resources—it’s going to require a lot of coverage.

Builder’s Risk Insurance is a crucial component to an effective risk management program in the construction industry. This type of policy provides coverage for buildings, structures, and installations under construction and may also include protections for materials, supplies, and on-site and in-transit equipment.

Builder’s risk insurance covers a variety of property damage resulting from:

  • Explosions
  • Fire
  • Severe weather
  • Vandalism
  • Theft

In addition to protection against property damage, a builder’s risk policy may also cover indirect expenses of a delay resulting from property damage. Examples of these soft costs:

  • Rental costs
  • Property taxes
  • Lost sales
  • Loan interest

Although builder’s risk insurance covers a lot, it still can’t cover everything. A list of common exclusions:

  • Natural disasters
  • Mechanical malfunctions or breakages
  • Employee theft
  • Terrorism and war
  • Rust and corrosion
  • Wear and tear
  • Materials
  • Engineers
  • Workmanship


Protect your data, protect your clients, your employees, and your business.

Don’t overlook the importance of protecting your construction firm on the digital frontier.

Construction and contracting businesses, big or small, should consider cyber insurance. As technology becomes more advanced, so do hackers and malicious actors. In the unfortunate event of a cyberattack, your business is at risk for significant data loss, such as:

  • Bid data
  • Intellectual property
  • Financial information
  • Employee PII
  • Client information

Are you prepared? Having any of this vital information stolen, erased, or compromised is not something to be taken lightly. Protect these assets, avoid financial loss, reputational damage, and potential lawsuits.


How much does all this cost?

Now that your brain is filled with all things construction insurance, you are ready for the next step—cost. The price of construction insurance is dependent on a variety of factors, primarily:

  • Type of construction or contracting services
  • Project type
  • Number of policies/policy endorsements
  • Business location
  • Yearly revenue
  • Number of employees

The step after that? Reach out to one of our brokers to talk about a tailormade risk mitigation strategy. Build, reconstruct, and renovate with peace of mind.

Learn more about how JGS can help you.