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Reduce Costs on Legal Exposure for Construction Insurance


The construction industry is one of the key areas that need insurance. As it is described as one of the greatest businesses, fatalities are almost inevitable. During construction, part of the building could cave down or even be faced with other risks.

construction workers
construction workers

To avoid huge payments in case of the prosecution, contractors have realized the value of construction insurance and the impact it can have on their lives. This insurance policy protects the construction company in the events of lawsuits.

The kind of protection accessed by the policy buyer includes legal liability, which is always associated with substandard work from some employees or subcontractors. By, therefore, understanding what factors affect your premiums in the insurances it is important to have an idea about construction insurance as well as ways to reduce costs in case of legal exposure.

Protecting Your Businesses

Savvy business owners have embarked on protecting their businesses before the worst takes place and this article will show you what you need to do to stay on the top in case you are in the same situation. The type of construction is one method that insurance companies focus on when assessing the damage.

In other words, construction that could be deemed as leading risk factors could as well carry more premiums. The same case is used to evaluate those contractors that would be eligible for lower premiums. Alternatively, the environment in which the contractor is exposed also plays a big role during evaluation procedures.

If you want to make to the list of contractors paying lower premiums, apart from spending the time to compare and contrast different quotes from different insurance companies, you must also put more efforts on your end such as putting common sense safety measures.

If there are limited safety precautions, it means that the insurance company will have to charge you higher premiums because chances of accidents are higher. Safety rules implementations can place your company among the list that accesses lower construction insurance plans.

Workplace Inspection

The insurance company will also inspect your organization and the workplace based on hazardous materials and what precautions are taken such as wearing face masks, hard hats or even goggles to protect the eyes. One of the things that affect most companies is hiring multiple subcontractors for the job.

These people always do work fast and fail to observe the construction guidelines to ensure quality. For this reason, cases of accidents are high and if the insurance company realizes that you are fond of hiring subcontractors, they will charge you higher premiums.

Therefore, construction insurance companies have the legitimacy of holding your organization liable for any shoddy work if by any chance you had hired subcontractors for the job. You could easily lower premiums substantially based on what safety rules you have put in place as well as being on top of the list to avoid hiring an inexperienced workforce during any contract.

Construction insurance is very important and almost all companies these days both large and small are maximizing on the potential benefits to help reduce legal costs in case of lawsuits.

Construction Insurance As A Type of Contractor Insurance

Be it the construction industry or the repair and remodeling industry, anyone who is a contractor will always have to protect themselves and their livelihood with an insurance policy known as the contractor insurance.

This policy not only protects against personal damage but also loss or damage to the client due to forces that were not directly influenced by the contractor or his/her actions.

Construction Insurance and Contractor Insurance Are Similar

Construction insurance, on the other hand, governs the construction industry as a whole and oversees construction companies rather than individual contractors. Hence, in a way, all contractors employed by a construction company get covered under such an insurance policy.

Effectively, such an insurance cover does the same task as that of contractor insurance except expanding it to include the company and its contractors as well as its clients. Both the construction insurance cover and contractor insurance policy are essential for companies and individuals looking to bid or place tenders for government agencies and projects.

Public works often require this to protect the public’s tax money from going to waste because of external factors. A fire, collapse of a section, opposition from NGOs, etc. all require money to deal with and these contingencies are never in complete control of the company.

Hence, to remove the additional burden of setting aside some amount of money for contingencies, most construction companies purchase construction insurance for each project virtually safeguarding it against failure. In fact, most governments worldwide have made this kind of policy compulsory to enter public work bids or tenders.

A contractor who renovates homes and joins hand with public works too uses their contractor insurance to show potential clients that their investment is virtually protected in adverse situations. Not only will work progress as scheduled even in the event of a fire but they will not have to spend anything out of their own pockets to get back lost investment.

What Differentiates Contractor Insurance From Construction Insurance

As mentioned previously, construction insurance is a comprehensive term that incorporates many more things than contractor insurance. Some of the insurance covers that make this massive policy include Worker’s Compensation Insurance and General Liability Insurance.

These two covers can be purchased by companies separately or together. It all depends on whether a company is willing to spend money getting the best individual covers or if they simply want a comprehensive cover.

With contractor insurance, there are no extra policies to complete it. It is just one cover that protects the contractor, their clients and also protects against potential bankruptcy of either party due to an unforeseen event.

So Is Construction Insurance Part Of Contractor Insurance?

All the discussion above should summarize contractor insurance as a smaller part of the construction industry while construction insurance tends to include everything that can be purchased in the insurance industry with regards to construction.

Hence, it is safe to say that construction insurance is a bigger and broader term than contractor insurance, meaning that it cannot be a part of a subordinate component of the latter.

Warren Paine

Warren is the senior mortgage loan officer who has worked in mortgages and loan industry since 1995. He study in Harvard and major in Finance with a Bsc. Honor Degree. He possesses a Paralegal Certificate as well.

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